Crude oil price, news and analysis:
- News that the number of new coronavirus cases in China has fallen for a second successive day is helping oil prices on hopes that the outbreak will have less impact on global demand than once feared.
- Moreover, the trend higher may well continue as China prepares to cut its benchmark interest rate and hopes persist that OPEC+ may cut supplies further.
Crude oil price outlook positive
The outlook has brightened for the price of US crude oil – West Texas Intermediate, or WTI – as a recovery that began on February 10 has developed into a trend higher that looks likely to continue for a while yet. That recovery has taken the price from a February 10 low of $49.57 per barrel to almost $53 at the time of writing but remains way below the high of $65.46 reached early in January and which is a possible long-term target.
US Crude Oil Price Chart, Two-Hour Timeframe (February 5-19, 2020)
Chart by IG (You can click on it for a larger image)
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Several factors are responsible for the advance:
- The number of new coronavirus cases in China has fallen for a second successive day, suggesting the hit to global demand from the outbreak may be less than once feared,
- China is reported to be poised to cut its benchmark loan prime rate Thursday to ease the strain on its companies,
- The OPEC+ group of OPEC members and their allies is to meet in Vienna on March 6 and is reported to be considering an advisory panel recommendation to cut supply by a further 600,000 barrels per day,
- Oil output from Libya has dropped sharply because of a blockade of its oilfields and ports, and
- The US has imposed sanctions on a unit of Russia’s Rosneft in an attempt to keep Venezuelan crude from the market.
After the recent run higher, a near-term correction in the crude price would be no surprise. However, the market is not yet overbought and traders might well see any slip lower as an opportunity to buy.
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— Written by Martin Essex, Analyst and Editor
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