A new year that started out poorly for energy futures got even rougher this week. WTI Crude Oil futures are down over 5% during this shortened trading week, despite the EIA Petroleum Report showing a 400k barrel decline in inventories and supply concerns over Libya stopping oil exports. This bullish fundamental picture seems to have been counterbalanced by Chinese coronavirus fears, as Gasoline and Heating Oil futures are also feeling the pain this week with the contracts down 3.75% and 4% respectively.
News outlets reported this morning that the virus outbreak had killed at least 26 and sickened hundreds, resulting in an entire Chinese city of 11 million people being quarantined. Traders seem to be exercising caution in case the outbreak spreads and affects demand for gasoline and jet fuel just as China gears up for the Lunar New Year holiday’s massive travel season. From a technical perspective, the /CL contract fell below both its 50- & 200-SMA as well as its yearly linear regression line in short order this week before stabilizing near the 55 level, with the RSI slipping into oversold territory this morning.
Yet after all the big swings, Crude Oil once again finds itself within the same familiar price range between 52 and 60 where it has dwelt for much of the past year. If the contract continues to falter, traders likely will be eyeing previous lows and the volume node near 54 for support.
Image by Terry McGraw from Pixabay
