As risk markets recover on hopes of China finally containing coronavirus, we could see a gradual recovery in oil prices. China posted the lowest daily rise in new coronavirus infections since Jan. 29 which send bourses rallying this morning.
On the one hand, the world’s second-largest economy is still facing issues in restarting their production with the threat of the virus still being present. On the other hand, we also saw a resume in businesses which could in turn slowly boost the demand in oil, which has declined toward the major support level, although it is seemingly being defended, for now at least.
We, therefore, bought today at 52.45 with SL at 50.80 and TP at 55.00 where the next resistance could set in. As this is a counter-trend trade we have to be careful and adjust the stop loss to entry as soon as possible. Yet recent developments in demand and also the OPEC which has reduced the output could soon lead to a move higher!