The prospect of slower economic growth is dragging the oil price down,
- The global measure of Citi's economic surprise index fell below its 2018 low and is now sitting at its lowest level in nearly 5 years.
- South Korea’s manufacturing PMI at 47.2 in February; lowest since June 2015
- Taiwan’s manufacturing PMI at 46.3 in February, the lowest in 39 months.
- China’s manufacturing PMI reported earlier this month, also pointed to a contraction in the manufacturing sector. Chinese service PMI also declined to 51.1, the lowest since October 2019.
- Yesterday, at its monetary policy meeting, European Central Bank (ECB) reduced its growth forecast for 2019, from 1.9 percent to 1.1 percent.
- According to today’s release, the Chinese trade balance in February was just $4.12 billion, as exports slumped 20.7 percent from a year ago. It is the worst number in a year.
Concerns over the economy are eclipsing the bullish impact from OPEC production cuts for the time being, despite Reuters’ report that OPEC has reached full compliance with the new production cuts.
The price action suggests that the bias for the day remains to the downside.
- Price actions have been forming back to back the hammer and inverted hammer candles and both bulls and bears failed to breach key resistance around $57.1 per barrel area, and key support around $55.5 per barrel area. Last night, an inverted hammer was formed, which gives downside bias today.
- WTI crude is currently trading at $55.8 per barrel and Brent at $9.4 per barrel premium to WTI.
