Oil : Plunged As Virus Resurgence
(Fri, 26 June 2020). Crude oil prices plunged over 5%, as virus resurgence dampened energy demand outlook
The resurgence of Covid-19 cases in the US, EU and parts of the emerging world led to mounting concerns over the economic recovery, as a second viral wave might derail governments’ re-opening plans, or even lead to a setback. As a result, energy demand might get hurt first, which was clearly shown in sectoral performance last night. Tourism & leisure, aviation, brick & mortal retail, luxury goods, automobile are among the more vulnerable sectors amid a global pandemic.
A second viral wave might weaken the outlook for energy demand and derail oil prices’ recovery. Market participants may be attempting to price in that possibility preemptively. This is reflected in a 5% drop in crude oil prices overnight.
Technically, Brent crude oil price has hit the upper ceiling of the ‘gap’ formed in early March. This gap remains a strong resistance zone to penetrate through. Immediate support level could be found at 20-day SMA, which is at US$ 38.20. MACD suggests more downward pressure in the near term.
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