Oil Dives To 20 Year Low
Fiona Cincotta April 20, 2020 9:16 AM
Oil is extending its decline, dropping to the lowest level in two decades on fears that the world is running out of places to store crude, as demand is crushed.
Oil is extending its decline, dropping to the lowest level in two decades on fears that the world is running out of places to store crude, as demand is crushed. Output cuts have clearly proved to be insufficient to cope with plummeting demand amid coronavirus lock down.
The 9.7 million barrels per day OPEC+ cuts are paling in comparison with the demand hit. Estimates are that global demand has been slashed by a third. The reality is that demand will not pick up until lock downs across the globe are eased – we are still a few weeks off that yet. It wouldn’t be surprising if the OPEC+ group decided to act again sooner rather than later in an attempt to put a floor under the price of oil, something they have failed to do so far.
Overnight the US WTI oil benchmark plunged by as much as 21% to $14.47 a barrel, its lowest level since 1999. The price has since picked up and is trading -17% at $15.23 amid some signs of optimism; New York coronavirus deaths eased and some European countries are slowly opening their economies or at least are putting exit strategies in place.
Levels to watch
Oil trades below its 50 and 20 sma on the 4-hour chart – a bearish chart. Immediate support can be seen at $14.67 the overnight low. After this round number $14 could offer support.
Resistance can be seen at $18.05 (overnight high) prior to $19.1 (20 sma) and $20.50 (16th April).
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.