Crude Oil Forecast – Crude Slips to 13-Month Low on Coronavirus Fears

In the European session, U.S. crude oil is trading at $48.97, down $0.89 or 1.80% on the day. Brent crude oil is trading at $53.66, down $1.30 or 2.36%.

Coronavirus Jitters Sends Crude Below 50.00

It has been a dreadful week for crude, which has slumped 7.1 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. The European Union had considered imposing border controls, but has decided that such a severe move would do little to contain the virus.

The outbreak has caused significant economic damage in China and its ramifications are being felt worldwide, such as the toll on the global tourism industry. With the disruption to economic activity, the demand for crude has also dropped, dragging prices lower. Crude fell to a daily low of 48.81 on Wednesday, its lowest level since January 2018. With analysts warning that things could worsen before they improve, oil prices will likely remain under downward pressure.

Meanwhile, OPEC members are watching nervously as oil prices continue to fall. OPEC is keenly interested in cutting production to stabilize prices, but it needs Russia on board if the cut to output will lift oil prices. However, Russia does not appear in any rush to lower production. With OPEC+ oil ministers meeting next week in Vienna, we could see significant movement in oil prices, dependent on whether an agreement is reached to cut output.

Technical Analysis

WTI/USD broke below the key 50.00 level on Tuesday and continues to lose ground. There is support at 47.50, followed by support at 45.50. On the upside, there is immediate resistance at 49.50, followed by resistance at 52.50 and 54.00. This is followed by the 50-day EMA at 54.30.

This article was originally posted on FX Empire

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