- Summary:
- Crude oil price staged a comeback in yesterday's New York session and pared most of its losses. However, gains could be limited at $52.00.
WTI crude oil price abruptly traded lower yesterday as risk aversion surrounding the coronavirus outbreak dominated market sentiment. The commodity opened at $52.32 and dropped to an intraday low of $50.18. During the New York session, oil was able to recoup some of its losses and closed the day at $51.06.
A couple of factors triggered yesterday’s risk-off sentiment. One, the G20 meeting highlighted concerns by world leaders surrounding the coronavirus. Second, the surge in cases in South Korea and Italy sparked speculations that the infection could be far from being contained. Consequently, these developments were bearish for crude oil price because they hinted that the outbreak would continue to dampen demand for the commodity.
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WTI Crude Oil Price Outlook
After dropping below trend line support yesterday, WTI crude oil price has pared most of its losses. The hourly time frame even reveals that the commodity has some room to trade higher before it encounters a confluence of resistance. At the $52.00 psychological handle, the 200 SMA and previous trend line coincide (from connecting the lows of February 10, February 11, and February 18). This price also coincides with the area between the 38.2%-50% Fib levels when you draw from the high of February 20 to the low of February 24.
However, a close below today’s low at $50.99 may mean that sellers still dominate crude oil price and that it could again fall to yesterday’s low at $50.19.