Crude oil has leveled off on Thursday, after strong gains a day earlier. Currently, U.S. crude oil is trading at $51.40, down $0.22 or 2.24% on the day. Brent crude oil is trading at $56.12, down $0.14 or 0.21%.
EIA Reports Large Surplus
On Wednesday, the Energy Information Administration (EIA) reported that U.S. crude inventories jumped to 7.5 million barrels last week, crushing the estimate of 3.1 million barrels. This was the highest weekly surplus since early November and marks a third straight week of surpluses. The release caused U.S. crude to retreat slightly from its high of the day of 51.72. Still, U.S. crude gained over 3 percent on Wednesday, on news that the growth rate of the coronavirus outbreak had eased.
OPEC Proposes Output Cut
OPEC members are becoming increasingly anxious as oil prices dip below the $50 level. Saudi Arabia has led an initiative to cut production by 600,000 barrels a day, but it remains unclear if Russia and Kazakhstan will go along with the proposal. On Wednesday, OPEC lowered its outlook for global oil demand growth in 2020 to 0.99 million barrels per day. This was down sharply from 1.22 million from the previous month’s estimate. In a pessimistic report, OPEC noted that “the impact of the Coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020.”
There is support for WTI/USD at 51.00. Below, we find support at the key 50.00 level, which was tested earlier this week. Next, there is a support line at 49.00, which has held since January 2019. On the upside, 52.00 is a weak resistance line, followed by a Fibonacci level at $52.52. Above, there is resistance at 53.00.
This article was originally posted on FX Empire
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