WTI retraces coronavirus-led losses to cross $46.00, eyes on OPEC meet
- WTI pullback from the multi-month low.
- Oil prices pay a little heed to China PMIs as Russia is likely to support OPEC+ production cut.
- Coronavirus continues to dent global trade sentiment, activity numbers from leading economies in the spotlight.
Following its drop to the lowest since December 2018, WTI recovers more than 2.0% while taking the bids to $46.25 during the early Monday. The oil benchmark earlier declined amid market consensus of demand depletion due to the coronavirus. However, expectations that the global oil producers will remain on a path for further output cut seems to have triggered the black gold’s recent bounce.
The deadly COVID-19 virus that emanated from China is now spreading widely across the globe with the US recently marking the second death due to the pandemic. Fears of the same have already pushed global policymakers to stay ready for further rate cuts, tax relief, etc.
While quantifying the epidemic, China’s official and private activity numbers, for February, slumped to the record lows during their recent updates. The same is likely to push the dragon nation towards further easing, which in turn could help recover from the latest fears of the 2008 crisis.
On the contrary, Russian President Vladimir Putin recently backed the Organization of the Petroleum Exporting Countries (OPEC)-led push to extend the global supply cut. The Russian premier said on Sunday that current oil prices are acceptable for Russia and he backed continued cooperation through the OPEC+ agreement to ensure market stability and combat the negative impact of the coronavirus outbreak on the global economy.
The OPEC ministers are scheduled for a meeting in Vienna on March 5-6 with the agenda of discussing the market situation and future action. The cartel will push it hard to extend the current 1.7 million barrels per day supply cut agreement the expires at the end of March.
Other than the OPEC and coronavirus headlines, the key PMI numbers from the US, UK and the EU will also be important to forecast near-term trade direction.
Technical Analysis
Unless crossing February 05 low surrounding $49.45, prices are less likely to avoid visiting the year 2018 low close to $42.15. However, $44.50/45 can offer an intermediate halt during the fresh declines.