Market News & Analysis
Oil At 13 Month Low, More Downside To Come?
Fiona Cincotta February 26, 2020 8:26 PM
Aggressive selling continues in oil, as fears deepen that the rapid spread of coronavirus will lead to a global pandemic and potentially to a global recession.
API reported a smaller than forecast inventory build of 1.3 million barrels, versus expectations of a 3-million-barrel increase. Today’s EIA weekly inventories report is expected to show a build of 2.3 million barrels.
As coronavirus panic takes over, traders are become increasing more concerned with how global oil demand will be hit and less interested in weekly inventory data. There seems to be little interest in the steep decline in Libyan output or whether the OPEC+ group decides to trim production again.
It is doubtful that OPEC+ will announce further output cuts right now, without having further information on loss of demand. There is a good chance that they will wait for fresh economic data to assess the impact of coronavirus first. Even if OPEC did announce additional production cuts, we are more likely to see some short covering now rather than a change of trend.
Levels to watch
Crude is down 1.7% today and almost 8% so far this week. Crude trades at a 13-month low and below its 50, 100 and 200 moving average, with a bearish outlook.
Immediate support can be seen at $49 (today’s low), a break through here could open the door to $48.30 (8th Jan ‘19 low) prior to $46.70 (4th Jan’19 low).
Resistance csan be seen at $50.42 (today’s high). This could lead towards resistance at $52. (yesterday’s high), a breakthrough there could negate the current bearish trend.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.