Crude Faces Pressure Amid New Risks, but Key Support Holds​

WTI Crude Oil Futures (April) 

Friday’s Settlement: 70.40, down -2.08 [-2.87%] for the day, -0.31 [-0.44%] for the week  

Last week’s rally was wiped away on Friday after futures fell more than $2.00. 

Futures were pressured by technical resistance, a large build in U.S. inventories, and progress on Ukraine – Russian ceasefire talks.

Fears over a global economic slowdown caused by trade wars and tariffs continue to dent demand side projections. 

Over the weekend, a new Coronavirus was discovered in bats in Wuhan, China. Fears and rhetoric are building over this story, which is something to keep an eye on. Why the Wuhan Institute of Virology is still allowed to operate is beyond me.   

Today, futures are lower by -0.16 [-0.23%] to 70.24

Headlines driving markets include the “New Coronavirus” scare and Ukranian strikes on the “Giant” Rosneft Oil Refinery in Russia. The main Crude processing unit is reportedly damaged, taking 340k bpd of refining capacity offline.

The macro environment is trading risk on, with equities, yields, and precious metals higher. Precious metals have been trading risk-on positive as of late. Crude is marginally lower but is gaining strength as we head into the U.S. open. 

Technical Analysis:

Our outlook is for a choppy, range-bound trade. Concrete, longer-term positioning is tough in this market, and a tactical approach is still preferred.   

We warned of de-risking in Crude as we moved into the weekend on Thursday and Friday. Friday’s settlement was right at our major three-star support zone of 70.03-70.35***.

Tactically, we like some long positioning here as the support zone has held through Sunday night. We may get some selling pressure and a stop run here at the U.S. open, but we like some tactical long positioning here to start the week. 

For intraday levels, our pivot and point of balance is set at…