U.S. Crude Slips to 3-Month LowOil prices have fallen for a fifth successive day, as crude struggles to stay above the $55 level. Will the downturn continue?
U.S. crude continues to lose ground this week. Currently, WTI crude oil is trading at $55.32, down $0.38 or 0.65% on the day. March Brent crude oil is trading at $61.69, down $0.40 or 0.64%. On Thursday, U.S. crude fell below the $55 for the first time since October 28.
China Virus Death Toll Rises
As the China coronavirus claims more victims and continues to spread, investors have become increasingly alarmed. The coronavirus has now spread outside of China, with confirmed cases in the U.S., Taiwan, South Korea, Japan, Vietnam and Singapore. There are growing concerns that the virus could cause a mass epidemic, which has led to sharp losses in the equity markets. Oil prices have also fallen, as crude is down 6.0% this week. Crude has plunged 9.7% in January, erasing almost all of the gains made in December.
China has taken severe measures to deal with the crisis, including imposing travel restrictions on some 20 million people. Still, the markets are likely to remain on edge, as new cases of the virus continue to be reported.
Crude Falls Despite EIA Drawdown
The Energy Information Administration (EIA) weekly inventory report is an important gauge of supply and demand for U.S. crude. On Thursday, the EIA estimated a small drawdown of 0.4 million barrels. This was slightly higher than the forecast of 0.1 million. The modest inventory draw was not enough to stem the continuing decline in oil prices, which fell below the $55 line on Thursday.
Crude has broken through support at 56.00 on Thursday and has tested support at 55.20 on Friday. The next major support level is at 53.50. On the upside, there is resistance at 57.25, followed by resistance at the round number of 58.00.