WTI crude oil price dropped below the $50.00 level yesterday but found support at last week’s lows. Could this indicate that the sell-off on crude oil price has bottomed out?
During yesterday’s trading, crude oil initially traded to an intraday high of $50.42. However, there were not enough buyers to fuel the bullish momentum. During the New York session, concerns about the coronavirus outbreak weighed on it and pushed it down to $49.39.
There were no significant updates on the disease. The number of confirmed cases, however, has continued to rise to 43,108 while the death toll is now at 1,018. Consequently, most of mainland China is still on lockdown which has dampened demand for crude oil.
OPEC+ has proposed to reduce oil production by 600,000 barrels per day to support prices. However, Russia has yet to confirm if it is on board with additional production cuts. Until it does, crude oil may have a difficult time sustaining its gains.
On the hourly time frame, we can see that WTI crude oil price bounced off last week’s lows around $49.40 in yesterday’s trading. By connecting the highs of February 6, February 7, and February 10, we can even see that resistance at the falling trend line has been broken. In forex trading, this is often interpreted as a sign that there is buying pressure in the market. This trend line break could indicate that WTI crude oil price may soon rally to its February 7 highs around $51.40.
On the other hand, if crude oil price is not able to sustain its gains above $50.00, it could suggest that a sell off back to its recents lows at $49.40 may still happen.