U.S. West Texas Intermediate crude oil futures are in trouble at the end of the week amid concerns over rising new coronavirus cases in the United States and China. Furthermore, there are renewed worries over a possible increase in U.S. crude oil production now that prices have recovered even though crude stockpiles are sitting at a record high.
The tone is turning bearish as investors continue to react to the surge in coronavirus cases although most traders don’t believe a second-wave of infections will be as damaging to the economy as the first-wave. The price action suggests a major price adjustment could be taking place. In the worst-case scenario, the crude oil markets could retrace 50% to 61.8% of the first rally.
Meanwhile, a new survey by the Dallas Federal Reserve Bank showed more than half of oil executives who cut production expect to resume some output by the end of July. This news is helping to keep a lid on prices early Friday.
Renewed COVID-19 Concerns
Worries about a second wave of COVID-19 cases in several U.S. states, where lockdowns had eased, and a rapid spread of infections in South America and South Asia are expected to keep a lid on fuel demand, traders said. The fear is that even if lockdowns are eased, people will stay home because of the perceived health risks.
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