Today in the early Asian session, WTI crude oil prices dropped mainly after the American Petroleum Institute (API) reported that crude inventories rose last week as well as because of the concerns of the coronavirus lowering the crude oil demand. US West Texas Intermediate futures (CLc1) fell 86 cents, or 1.5%, to $55.88 a barrel after earlier falling to the lowest since December 3. The contract declined by 2.7% on Wednesday.
On the coronavirus front, the virus has reportedly killed 17 persons so far in China, and leaders have almost closed Wuhan city. China is also keeping the focus on the other nations in order to understand the cause behind the virus. By the way, the virus is known to be transmitted human-to-human, which resulted in the increased risk-tone of the market.
The latest coronavirus has refreshed memories of the Respiratory Syndrome (SARS) epidemic in 2002-2003, which was also started in China, and dented economic growth and a slump in travel and tourism.
On the other hand, oil inventories gained by 1.6 million barrels for the week ended January 17, according to the weekly report published by the API. Meanwhile, the Energy Information Administration (EIA) will report its weekly inventory figures tomorrow at 11:00 AM ET, slightly later than usual, due to the Martin Luther King Day Holiday on Monday. The EIA is expected to report that crude output dropped by 1 million barrels last week, continuing the previous week’s drop of 2.5 million barrels.
Daily Support and Resistance
Pivot Point 56.79
On the technical side of the market, WTI crude oil is supported above 55.58 and has recently formed a bullish candle. This particular candle is signaling the chances of bullish momentum in the crude oil. Since the RSI is holding in the oversold zone, we may see some bullish correction in crude oil prices. Rhat being said, WTI prices can soar to 23.6% Fibonacci retracement level, which is 56.35. Let’s look for buying trade today.