Crude oil prices likely to face resistance at $58/bbl on coronavirus fears

The onset of the Coronavirus had pushed crude oil prices in a bear phase this year. Typically, a bear market is defined as a fall of 20 per cent or more from the high. The WTI Crude fell from a high of $65.65 a barrel in January fell to a low of $49.31 on February 4, translating into a fall of 24.88 per cent.

Crude oil prices declined as global investors and traders weighed the effects of spreading coronavirus, which has dampened demand for oil from China, world’s second top consumer. As per Bloomberg estimates, China’s crude oil demand is expected to fall by nearly 3 million barrels per day (mbpd), which is nearly 20 per cent lower from the current requirement of 15 mbpd. This fall prompted the OPEC to call an emergency meeting to decide on further cuts from its 2.1 mbpd output, which comprised of 1.7 mbpd cut by OPEC+ and a voluntary cut of 0.4 mbpd by Saudi Arabia.