Oil price falls as IEA sees first demand drop in a decade

The price of crude oil declined today after a bleak report from the International Energy Agency (IEA). The agency said that global demand was expected to fall in the first quarter of the year. This will be the first quarterly drop in more than ten years. In its report, the IEA slashed its 2020 forecast to 825k barrels a day from the previous 1.2 million barrels. The reason for this is that China, the biggest market for crude oil, is currently facing a major epidemic. This disease has led to the shutdown of some major cities. Many airlines have suspended their flights to China while many factories have closed down. This report came after OPEC also lowered its demand forecast for the year.

European stocks declined today as fears of coronavirus returned. In the past few days, the market has been optimistic that the number of cases was falling. This changed yesterday when health officials in China reassessed how they diagnose the disease. The officials added more than 14.840 people on the official tally. This brought the official number to 48,206. More than 1,400 people have died from the disease. 

The market also reacted to mixed corporate news. In Switzerland, Credit Suisse reported the best annual performance since 2010. In the UK, regulators said that they were investigating Barclay’s bank Jes Staley on his links to Jeffrey Epstein.

Gold prices were relatively unmoved today as the market continued to reflect on the Fed chair testimony. In the testimony, Jerome Powell was questioned about the state of the economy and how the Fed plans to respond to the coronavirus illness. Powell said that the US economy was resilient as the crisis continued. He also warned that the bank had limited options if the economic growth turned around. This is because the Fed has already brought interest rates to almost zero. It has also continued to increase its balance sheet. 

EUR/USD

The EUR/USD pair declined to an intraday low of 1.0865 which was the lowest level since 2017. This is perhaps because many investors are holding more dollars as coronavirus spreads. The pair is trading below the 14-day and 28-day EMA. It is also along the lower line of the 14-day Bollinger Bands. The average directional movement index has risen to 60. This is an indication that the pair may continue moving lower.

XAU/USD

The XAU/USD pair has been on an upward trend since February 5, when it was trading at 1547.40. The pair is trading at 1577.46, which is along an important resistance line as shown below. The price is also slightly below the 61.8% Fibonacci Retracement level. The current price is important because it appears that the pair has formed a double top pattern. As such, there is a possibility that it may decline. Still, there is a possibility that the pair may break past the resistance level of 1576.

XBR/USD

The XBR/USD pair declined today after the bleak report from the IEA. The pair moved from an intraday high of 56.26 to a low of 55.00. This price is between this month’s range of between 56.55 and 53.19. As a result of this consolidation, the price is along the 14-day and 28-day EMA. There is a possibility that the pair may move lower as it attempts to test the previous support of 53.19.