WTI bounces on OPEC output cuts story

​​​​​​​Economics, supply factors and even the tensions in the middle east have been cast aside. The markets are taking the threat of a spread in the coronavirus as very real and imminent and that is weighing on global growth prospects and demand for the price of oil. West Texas Intermediate crude (WTI) hit a three month low yesterday on fears of global contagion in both panic and the virus itself. 

However, bulls stepped to the plate on Tuesday following a Reuters report that was citing OPEC sources, that the Organization of the Petroleum Exporting Countries wants to extend their current oil-output cuts until at least June. There was also the possibility of floated by OPEC of stepping in with deeper cuts if oil demand dried up due to the coronavirus. 

Coronavirus spreading

Meanwhile, the latest reports are that the number of known cases of the new virus rose by nearly 60% overnight. A shortage of test kits has led experts to warn that the real number may be higher. Germany, Japan and Taiwan report first coronavirus patients who didn’t visit China. 

At the same time, analysts at TD Securities explained that "an abundance of supply and lackluster product demand which has been most clearly observed in the aftermath of the US-Iranian tensions and Libyan Crisis which failed to make their mark despite nearly 1m bpd of supply lost."

"As speculators price-in a double-whammy from fears of weakening demand and oversupply, CTA funds are adding downside pressure as a large-scale selling program takes place across WTI, and RBOB gasoline, with more moderate selling in Brent."

WTI levels