WTI: Skidding along the bottom of 2020 downtrend
- OPEC and its allies not seen to intervein at this juncture, weighing on oil.
- Coronavirus sapping up demand sentiment, keeping oil prices on the back foot.
The price of a barrel of oil, West Texas Intermediate crude,(WTI) has been trapped in a narrow range and skidding along the bottom of this year's downtrend in the $49 handle. At the time of writing, WTI is trading at $49.74.
Oil futures were performing at their worst levels for more than a year as Chinese demand falls out he 'bottom of the barrel' in the aftermath of the coronavirus outbreak which continues to disrupt financial market's confidence and weighs negatively on the demand side outlook for energy.
Markets are looking for the Organization of the Petroleum Exporting Countries, OPEC and its allies, to intervein at this juncture, however, the sentiment is that they are unlikely to immediately deliver an additional cut to production. A joint technical committee meeting last week suggested an additional production cut of 600,000 barrels a day, but Russia said it needed more time to consider the proposal. Subsequently, West Texas Intermediate crude for March delivery lost 75 cents in Monday's settlement, or 1.5%, to settle at $49.57 a barrel on the New York Mercantile Exchange. That was the lowest front-month finish since Jan. 7, 2019.
While the Energy Information Administration will release its short-term energy outlook report Today, markets are likely more tuned into the updates surrounding the coronavirus. We will then have the monthly oil reports from OPEC, on the same day, and the International Energy Agency the following day which could be more of interest,
China has reported 908 deaths and about 40,000 cases of coronavirus. On Sunday alone, 97 people died which was the highest daily death toll since the outbreak began. Almost 6,500 of the affected patients were in critical condition, authorities said Monday.
US data to affect the US dollar?
Meanwhile, we have key US data this week and we will also hear from chairman Jerome Powell in his Semi-Annual Testimony and we will have both Consumer Price Index and Retail Sales.