Fears of the virus spreading outside of China and hurting global growth further is weighing on the oil market to start the week
Both Brent and WTI are down by 4% on the day, with the former sitting at $56.05 while the latter is at $51.24 currently. Oil prices are taking a severe hit on the back of risk aversion in the market but also as fears of a further hit to global growth are bubbling up.
The initial hit to oil amid the virus outbreak is that demand in China will slow down, but as we see the virus outbreak become more widespread in South Korea and Italy over the weekend, the worry is that it could hurt demand elsewhere in due time.
Right now, oil is tracking just under the 61.8 retracement level - $51.36 - of its recent recovery and that will be a key level to watch for any support in trading today.
If price starts to slip back towards the broken support level at $50.60, it could be another precarious position for oil in trying to keep above $50 ahead of the OPEC+ meeting that is scheduled for next month.
