WTI bulls stepping in as volume picks up, leading to a bullish daily pin-bar

The price of a barrel of oil is trading down over 1% on Tuesday with risk aversion kicking in again. At the time of writing, West Texas Intermediate crude is trading at $51.79, having travelled from a high of $52.16 to a low of $50.91. 

Concerns about the coronavirus and its impact on demand as well as doubts that the Organization of the Petroleum Exporting Countries and its allies, including Russia, are about to reduce output is weighing on the bullish attempts of a sustained correction, capping the first weekly gains in six weeks, with WTI notching a 3.4% weekly rise. However, on the other hand, that is not such a bad sign. If OPEC is not considering further cuts, perhaps their opinion is more optimistic for an organic recovery in prices and that demand will eventually pick-up again. 

Bulls are not about to give up just yet

The death toll from the coronavirus outbreak in mainland China has reached at least 1,868 with 72,436 infections confirmed. However, Tuesday marked the first time since January that the daily infection figure for the Chinese mainland fell below 2,000 and the bulls are not about to give up just yet.

In fact, the US stock markets are likely not taking their cues from the coronavirus updates, not entirely. We have seen the three major US stock market indexes fall due to Apple saying it will miss its quarterly revenue target due to the coronavirus. The Dow Jones Industrial Average was down 213 points, or 0.7%, in the early afternoon on Tuesday – the S&P 500 dropped 0.5% and the Nasdaq Composite lost 0.3%. 

If we take into consideration that the longer the virus continues to decline in new cases, investors will be encouraged to accumulate assets at lower prices which could well underpin US benchmarks, especially should Donald Trump be seen to win the Presidential elections, taking into consideration the fiscal stimulus plans. After all, the Trump administration is considering making it possible for Americans to invest more in the stock market on a tax-free basis. As a road map to economic recovery is planned out, we could see a bounce back in speculative investment into energy. 

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WTI levels

The price of oil has struggled to hold onto gains in the 51 handle and volume has been low, signalling that the bullish breakout was potentially always going to b short-lived with October's support structure resisting the initial upside tests. However, the latest price action is encouraging with a bullish pin bar while the market remains in accumulation with volume starting to build. The 23.6% Fibonacci retracement target is located just through 53 the figure at 53.20.