Crude Daily Forecast – Coronavirus Sends Crude Into Freefall

Crude prices have steadied on Monday, after a dreadful week. Currently, U.S. crude oil is trading at $45.22, up $0.04 or 0.06% on the day. Brent crude oil is trading at $50.46, down $0.35 or 0.70%.

Crude Slides Below $44

The coronavirus continues to disrupt the global economy and the fallout has taken a sharp toll on crude prices. Crude fell by a staggering 15.1% last week and briefly fell below the $44 level earlier on Friday. Earlier on Monday, crude touched a low of 43.48, its lowest level since December 2018.

As the coronavirus continues to spread, the economic fallout to the global economy is growing. This has been the catalyst behind a plunge in oil prices. Crude declined by 14.7% last week and briefly fell below the $45 level earlier on Friday. This is its lowest level since January 2019. The coranavirus outbreak continues to spread and the United States has confirmed its first death from the outbreak. This has raised concerns that the U.S., which is the world’s largest consumer of oil, could see reduced demand for oil.

The coronavirus has taken a bite out of China’s economy, with much of the industrial sector paralyzed. This has led to a sharp reduction in demand for oil. China is the world’s second-largest oil consumer, and the deteriorating situation is taking its toll on Saudi Arabia, which is China’s top supplier of oil. This has forced Saudi Arabia to sharply reduce its oil exports to China, which currently stands at about 2 million barrels per day (bpd). Analysts say that this amount could be cut significantly, perhaps as much as 300,000 bdp. Chinese refineries have sharply cut refinery runs, leading to a growing oversupply of crude on global markets.

Technical Analysis

WTI/USD tested support at 43.55 earlier on Monday but has moved higher. Below, we have support at the round number of 42.00. On the upside, there is immediate resistance at 45.50, followed by 47.50.