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Oil: Increased uncertainty around demand due to Covid-19

02/20/2020 | 04:21am
Times are tough in the oil markets, especially in the face of fears about the spread of coronavirus in China. The decline in prices since the beginning of the year, which has been in the order of 13%, is evidenced by the fact that crude oil has been plagued by gloomy forecasts. OPEC and the International Energy Agency (IEA) have jointly adjusted their forecast growth in oil demand in 2020 to take into account the economic impacts of the coronavirus. It must be noted that these visions are significant, with OPEC lowering its growth forecast by 19%, while the IEA is cutting its forecast by 30% and the IEA is expecting a worsening of the surplus;this is because the oil is flowing in the United States, where production is at an all-time high, at 13 million barrels per day (mbpd). In this context, the market is relying heavily on OPEC+ policy to support the prices. The enlarged cartel became aware on February 6 of the proposal of the Joint OPEC Technical Committee (JTC) to reduce daily production by 600,000 barrels per day in response to the expansion of the coronavirus. Russia is always eager to make further efforts, a position that will increase the nervousness of operators if a consensus is not reached. The next meeting of OPEC and Russia will therefore be followed by a very serious market failure. It will take place on March 5; A graphical point of view, given weekly data, a technical rebound is formed at contact 53 USD, major support on this unit of time. The rebound is extended to a sharp 58-59 USD, the former lower bound of the long-worked range trading range between 58 and 72 USD. As long as prices remain below this level, the underlying trend will remain fragile and sellers will stay in control. An integration of the range would on the other hand make it possible to neutralize the.  configuration;
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