WTI drops below $52.00 and challenges 2020 lows
- WTI loses further traction and breaches $52.00.
- Crude oil is closing its worst January since 1991.
- US oil rig count will close the docket later in the session.
Prices of the barrel of WTI are losing further ground at the end of the week and are trading at shouting distance from yearly lows in sub-$52.00 levels.
WTI weaker on coronavirus, supplies, looks to data
The barrel of West Texas Intermediate is down for the fourth consecutive week so far, losing more than 15% this month and on its way to close the worst January since 1991. It is worth mentioning that prices shed more than 21% if we factor in the yearly high near $66.00 mark (January 8th).
Earlier today, crude oil was trading on a firmer note following results from the Chinese manufacturing PMI. Gains, however, were ephemeral. As usual in past weeks, traders’ sentiment remains heavily affected by the ongoing developments from the Wuhan coronavirus and its probable impact on the Chinese and global economies.
These jitters seem to be more than enough to offset any positive driver coming from the potential extension of the OPEC+ oil output cut agreement currently in play or even the likeliness of deeper cuts.
Also collaborating with the downside in prices and the sour sentiment appears the persistent build in US crude oil supplies, as per the latest weekly report by the EIA out last Wednesday.
All in all, it looks like crude prices will need a really strong and serious catalyst – such as a shock from the demand side or fresh geopolitical effervescence – in order to motivate a change of heart among traders and the subsequent reversion of the bearish trend.
Later in the NA session, driller Baker Hughes will publish its usual weekly report on US oil rig count.
WTI significant levels
At the moment the barrel of WTI is retreating 2.34% at $51.70 and a breach of $51.61 (2020 low Jan.31) would aim for $51.06 (monthly low Oct.3 2019) and finally $50.47 (monthly low Aug.7 2019). On the flip side, the next up barrier is located at $54.35 (weekly high Jan.29) seconded by $57.17 (200-day SMA) and then $58.37 (55-day SMA).