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WTI keeps the red around $50 amid China coronavirus risks

  • WTI downed by China coronavirus led oil demand concerns, firmer USD.
  • Losses capped by OPEC+ cuts hopes, drop in OPEC production.
  • Eyes on virus updates and US weekly crude supplies for the next move.

The bearish pressure around WTI (oil futures on NYMEX) remains unabated so far this Monday, as the bears derive support from tepid risk tones amid looming China coronavirus fears and broad-based US dollar strength.

Markets remain unnerved amid rising concerns of the negative economic impact of the virus outbreak globally, which eventually elevates worries over the impact on the demand for oil and its products. Meanwhile, broad-based US dollar strength, in the wake of increased safe-haven buying and upbeat US Non-Farm Payrolls data, also collaborates with oil-price weakness.  

Despite the persisting downside risks, the black gold manages to find temporary reprieve from increased expectations of the OPEC and its allies (OPEC+) output cuts extension while falling in OPEC crude oil production last month also helps cap the losses.

According to the monthly S&P Global Platts survey, the cartel’s crude oil production fell by 470,000 bpd from December to 29.08 million bpd in January, the first month in which the current stricter cuts took effect.

Looking ahead, the coronavirus-related developments will continue to influence the risk-flows and USD dynamics, as oil traders await the US weekly Crude Stocks Change data due later this week for a fresh trading direction.

WTI Technical levels to consider

 

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