Oil prices continued to rise from their lowest levels in nearly more than a year, as markets hope that the world's major oil producers will agree to a further output reduction, while ignoring expectations of lower demand due to the outbreak of the Coronavirus in China, the largest oil importer in the world.
West Texas crude reached its highest level since late January at 52.50 dollars a barrel, while Brent crude rose to the levels of 57.34 dollars a barrel.
OPEC reduced its forecast for demand in 2020 by about 200k barrels per day, in a sign that might suggest that the OPEC+ group will cut more production. For its part, Russia has not yet decided whether to extend the production cut agreement with OPEC and other oil producing countries until now, as the current agreement ends at the end of March.
Chinese demand for oil, the second largest consumer of crude oil, has fallen due to travel and quarantine restrictions. Chinese authorities recorded more than 5,000 new cases today, Friday, including more than 120 deaths, bringing the total infected cases so far 63,851 cases, about 55,748 cases were treated while 1,380 deaths.
The US Energy Secretary said it was unlikely that the impact of the Corona virus would be dramatic on oil prices even if Chinese demand had fallen by about 500,000 barrels, and that the pandemic had already had a marginal impact on energy markets.
For its part, the International Energy Agency (IEA) expects demand to decrease by about 435,000 barrels per day during the first quarter, the first decrease since the global financial crisis in 2009, due to the spread of the Coronavirus in China.
Technically, the oil managed to break above the $ 52 levels, which represents the neckline of a double bottom pattern that may support the high prices to target the $ 54 levels, currently we see prices moving in a strong bullish trend, noting that prices exceeded the moving average level 100 on the 4-hour time frame and SMA 50 approaching of the cross above, with moving average 100.