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WTI Crude Down 12% for the Week

Crude Oil has been on a bearish trajectory since the beginning of the year, and continues its downward trend this week.

WTI Crude plunged below the $50 mark and dropped as low as $45.94 per barrel. This marks a low of almost 6% for the day, and more than 12% for the week. A drop back down to its previous low of $45.52 which it hit in December 2019 is most likely set to happen as the coronavirus continues to directly impact oil prices, but the real question is whether or not it will recover after that, or continue to drop further.

As the price of oil continues to drop, it could impact production around the globe. While some countries such as Saudi Arabia can produce a barrel of oil for as little as $10, for others such as the UK, Australia, and Canada, it can quickly become unprofitable for them if the price of crude continues to drop any further. This would result in long term impacts as well as short, as this does not immediately slow down oil production, but rather discourages the exploration and development of new oil fields.

Crude oil is the world’s most traded commodity, and as a result has been one of the most affected by the coronavirus. China being the largest consumer of oil in the world does not help its cause either. China is beginning to lessen its quarantine restrictions on citizens in affected areas as the number of cases starts to decrease in the country, but large portions of its industry are still closed.

In other parts of the world, the US has braced themselves for the virus to impact them, as a woman in Northern California contracted the illness without coming into contact with anyone known to have the infection, which caused officials to speculate that the disease had spread amongst the US community. California health officials are currently monitoring 8,400 people for symptoms of the virus, ever since 33 people tested positive. After downplaying the effects of the coronavirus in the States just earlier this week, US President Donald Trump will be holding a White House conference to prepare for its spread in the country.

While the spread of the outbreak is continuing to slow down in China, a global pandemic still looks to be on the horizon as more and more countries are reporting new and increased cases. Oil producing countries in the Middle East have also caught the coronavirus as Iran struggles to contain its outbreak. As the country refuses to quarantine infected cities and instead is only restricting domestic travel, they have now reported 26 deaths, with several government officials being infected as well.

For a more technical analysis on WTI crude, watch our video by Anish Lal at BlackBull Markets here, or on Instagram and Twitter at blackbull_markets and @blackbullforex, respectively.

Crude Oil’s Dramatic Plunge

WTI crude oil was down 30 cents for the day, dropping down to $52.60 per barrel. It is down almost 1.8% for the day, and almost 14% for the month of January, continuing the downward trend.

This is a stark change from the beginning of the month, when oil prices peaked at above $63.50, the highest they had been since April 2019.

BlackBull Markets’ Anish Lal had the following to say regarding the movement of WTI crude:

 “Crude Oil, commonly known as Black Gold, has been under extreme pressure in the wake of the Virus, as investors begin to price in slowing global growth based on the potential economic impacts from slowing demand in China. Traders should find strong support just sub the $51 mark, and a move into this zone will be key in depicting future direction. A break below this key support level could see lows from November 2018 sub the $50 price range.”

For more from Anish, watch his Trade in 60 Seconds here, as well as follow us on Instagram at blackbull_markets for the latest updates.

Many assets have been impacted by the continued spread of the coronavirus in China, but crude oil has experienced one of the biggest drops.  Crude oil is the world’s most actively traded commodity, with China being one of the largest buyers.

The latest news on the coronavirus sees 170 confirmed dead, with over 7,700 confirmed cases. With no cure yet been found, prices are expected to continue to drop as the infection spreads. Various countries are scrambling to evacuate their citizens from Wuhan, including Japan, Australia, and New Zealand.

The World Health Organisation will be meeting tomorrow, in order to discuss whether or not to establish a global health emergency regarding the virus. This decision comes with the latest news of 3 countries- Japan, Germany, and Vietnam- all reporting limited human-to-human transmission.

While the number of cases continues to escalate in China, there has been no sustained growth in infections in other countries. There have also been no deaths caused by the virus in any other country outside of China.

Sources: BBC,