Oil price plunges to around just $25! May bounce back, 'book profit' on every rise, say experts
Oil price today is facing strong resistance at $28 per barrel levels at NYMEX while it has strong support at $20/barrel, say experts.
Coronavirus fear has indirectly sparked the greatest crisis in the oil markets since 2016. Oil price today crashed to the levels of around $25 per barrel. But, according to commodity experts, due to some pro-active approach by the US Federal Reserve and the US administration expected to announce a bailout package to counter Coronavirus, there can be some bounceback in the global oil prices. However, due to the lowering demand, especially in the Asian market after the lockdown in India, China, and gulf countries, the overall trend of oil price is still negative.
Connecting the fall in oil prices with the Coronavirus spread Yan Chong Yaw, Director of Oil Research & Forecast at Refinitiv said, "The impact of COVID-19 on Asia’s oil markets has resulted in crude prices to plunge, falling to under $30 per barrel, amid the biggest daily price rout since the gulf war in 1991. It has also damped global oil demand for 2020 that has set to contract for the first time in over a decade at 99.9 million barrels." Yan said that China’s demand in crude is expected to return slowly despite having seen the worst of Covid-19 outbreak and due to peak maintenance until At least April. "Despite the slump in crude demand and deep cuts to refining capacity, diesel exports out of Asia has hit an all-time high of 10.3 million mt for Feb which is well above the 2019 average of 8.7 million mt/month, encouraged by sudden low price environment, said Yan.
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Expecting some bounceback in oil price Sugandha Sachdeva, Vice President at Religare Commodities said, "The US Fed has shown some pro-active approach to counter Coronavirus spread in the US while the US administration is expected to announce the bailout package to help the US economy come out of the COVID-19 virus impact on it. These measures are expected to bring some bounceback in the oil prices, but, the overall trend of oil price is still weak." Advising commodity investors to book profit on every bounceback she said that crude oil price is facing strong resistance at $28 per barrel levels at NYMEX while it has strong support at $20/barrel.
Oil price today in the global markets have fallen down due to the lockdown in India as Crude Oil makes up for four of the top five imports in India. After the lockdown, its demand is expected to go down as even after the Coronavirus spread, inflows of crude oil to India and Japan were largely steady, despite the on-month dip with falls mainly witnessed from the arrivals of OPEC.
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