Crude is trading sideways in Wednesday trade. U.S. crude oil is trading at $53.95, up $0.01 or 0.03% on the day. Brent crude oil is trading at $60.22, up $0.22 or 0.37%.
Crude Steadies After Sharp Slide
The sharp slide which started last week sent U.S. crude prices lower by over 10 percent. There was some relief on Tuesday as crude prices recovered by over 2 percent. Still crude has had a miserable January, falling close to 12 percent. The catalyst for the sharp drop in oil prices has been the China coronavirus, as the outbreak has raised concerns that the Chinese economy will be damaged and demand for oil will be reduced. China is the world’s second-largest consumer of oil, so a further slowdown in the Chinese economy could translate into lower oil prices.
Markets Await Fed Rate Decision
The Federal Reserve will wrap up its monthly policy meeting later on Wednesday. The Fed is expected to maintain the benchmark rate, as the CME Group has projected an 89% likelihood that policymakers will maintain current rate levels. With the U.S. economy performing well and inflation remaining steady, there Federal Reserve does not appear to be under pressure to adjust interest rate moves in the near future. Investors will be keeping a close eye on the rate statement, as the tone of the statement could affect market movement. The Federal Reserve is expected to reassure investors that it is carefully monitoring the China coronavirus and tensions with Iran.
Technical Analysis
The trend for crude remains down. On the downside, support for 53.50 is under pressure and could break during the day. This is followed by support at the 52.00 level. On the upside, 53.50 is an immediate resistance line. Above, we find resistance at 55.20.
