Crude Oil Stems Nasty Slide, But is More Trouble Ahead?

After six straight losing sessions, oil prices have steadied in Tuesday trade. Currently, WTI crude oil is trading at $53.11, up $0.33 or 0.61% on the day. Brent crude oil is trading at $59.02, up $0.06 or 0.10%.

Crude Still Under Pressure

U.S. crude has reversed directions on Tuesday, but still remain under downward pressure. Crude is down by 12.8% in January and is at levels not seen since October. 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.

China’s coronavirus continues to be a major concern for investors worldwide.  The epidemic has spread outside of China, with confirmed cases in the U.S., Canada, South Korea, Japan, and France. If China is unable to contain the outbreak, this could result in further turmoil in the markets.

Investors Await Fed Rate Decision

The Federal Reserve is holding its monthly policy meeting and will set the benchmark rate on Wednesday. The Fed is expected to maintain the benchmark rate between a range of 1.50% and 1.75%. There has not been much in the way of economic numbers since the previous meeting in mid-December, due to the Christmas holidays. Fed policymakers appear content with the economic picture and current interest rate policy. Investors will be keeping a close eye on the rate statement, as the tone of the statement could affect market movement.

Technical Analysis

Crude has steadied on Tuesday, but the trend remains downward. On the downside, there is support at the 52.00 level. This is followed by a support line at 51.50. On the upside, 53.50 is an immediate resistance line. Above, we find resistance at 55.20.