CRUDE OIL MARKET REMAINS UNDER MIXED SENTIMENTS

Since our last report on the crude oil market sector, the price continued its plunge by 8.36%, to finally finding support at 49.35 handle, previous support from November 2018.  With the Covid-19 initial panic still hovering the market – sadly – its impact in the crude market demand is now unquestionably.

Now without any further ado, let’s read the charts. Price action was able to recover some lost grounds from previous deep with the most needed rebound from 49.35 level, forming a double bottom before its current uptrend price correction. Although there is still some downward pressures, the price action was able to create a clear uptrend channel. With MADC showing a precise bullish bias, we have a Stochastic already getting into the overbought zone. So, we should expect some market correction to the lower level of the channel before experiencing a new higher high in the oil price action.

From the fundamental side, this week was agitated, with a market in a moderately adverse mood, and the coronavirus continuing to toll on the global economic outlook, the crude oil market experienced some news headlines that carried mixed sentiments into it. Just on Tuesday, the confirmation of the sanction imposes over Rosneft subsidiary in charge of oil trading to its continued support helping to bypass the embargo imposes by the US Treasury department to the corrupted Venezuela government. 

And yesterday comments from Mr. Novak arguing about the OPEC and its allies gathering before March to discuss the proposal to cut oil production no longer making much sense. Here some analysts support the theory as well, where it is still too early to tell whether the global oil demand will be affected by the current situation, and either if China’s needs for oil will come back in full in 2020. We can only hope for the investors to seize the opportunity to buy energy stock on a significant discount.

Last but not least, the US dollar strength continues to create pressure on the oil, real healthy economic data released by the US has made investor move their assets into the currency as a safe-haven niche. A stronger greenback typically makes oil more costly as the commodity is generally priced in dollars.

Stay tuned and happy weekend ahead. See you next Friday.