Crude Putting Pressure on $50 Level

Crude oil has started the trading week with losses. Currently, U.S. crude oil is trading at $50.07, down $0.36 or 0.71% on the day. Brent crude oil is down sharply, trading at $54.02, down $0.40 or 0.77%.

U.S. Nonfarm Payrolls Sparkles

The U.S. wrapped up the week with mixed employment data. The official nonfarm payrolls report followed in the footsteps of an outstanding ADP nonfarm payrolls earlier in the week and jumped to 225 thousand in January. This was up from 145 thousand in December and easily surpassed the estimate of 163 thousand. Wage growth ticked higher to 0.2%, up from 0.1% in the previous release. Still, this missed the forecast of 0.3%. Silver showed little reaction to the mixed numbers.

Will Crude Break Below the $50 Level?

U.S. crude plunged 15.7% in January and the losses have continued in February, with losses of almost 3 percent so far this month. The coronavirus has severely disrupted the Chinese economy and weighed on crude prices, as China is the world’s second-largest consumer of oil.

Traders should be prepared for a busy week, starting with Federal Reserve Chair Jerome Powell, who testifies before Congress Tuesday and Wednesday. Later in the week, the U.S. releases key consumer numbers – CPI and retail sales. If these events indicate strength in the U.S. economy, crude prices could rebound.

Technical Analysis

The key $50 level is under strong pressure in support and this level has been tested on Monday. Below, we find support at 49.00, which has held since January 2019. On the upside, we find resistance at 51.00 remains relevant and is an immediate resistance line. This is followed by resistance lines at 52.00.