Crude Oil Under Pressure Amid Trump’s Restrictions on Travel – Technical Outlook
Arslan Butt • 2 min read
During the early Asian session, WTI crude oil prices came under pressure again and dropped to $31.15, mainly due to the World Health Organization (WHO) officially declaring the novel coronavirus a pandemic. Additionally, Trump’s decision to ban European travelers to control the virus outbreak also sent the prices lower. Trump released his plan to control the coronavirus and announced these following decisions:
US President Donald Trump banned all travel from Europe to the US for the next 30 days effective Friday at midnight. He also said that travel bans would not apply to the UK. He also said that the US would take emergency action to provide financial relief for workers who are ill, hospitalized, or caring for others due to coronavirus. He also said that he will provide capital and liquidity to the small firms which are affected by the coronavirus, provide low-interest loans as well.
But eventually, Donald Trump failed to reduce the fears about intensifying coronavirus slowdown in the global economy because investors were expecting more robust stimulus measures from him.
WTI Crude Oil prices dropped almost 30% on Monday after both Saudi Arabia and Russia denied to cut production further and instead sell as much of their crude as possible at lower prices, fueled fears of a price war again.
On the data front, US output of crude oil increased much more than expected last week, the Energy Information Administration (EIA) reported Wednesday. Oil inventories increased by 7.7 million barrels for the week ended March 6, the EIA said, opposed to the expectation of 2.3 million barrels, according to the latest report.
Daily Support and Resistance
Pivot Point 33.99
The technical side of crude oil is heavily bearish, falling from $46.16 to $27 and then recovering to trade at $35. For now, WTI crude oil is likely to maintain the same pace. Overall, the RSI is extremely oversold, and chances of a bullish correction remain strong. WTI can retrace back until 38.2% Fibonacci retracement to 35.50. We can consider taking another sell position below 35 with a target of 29.70. Good luck!