- Crude oil prices falls to $20, the lowest levels since 2002
- The coronavirus outbreak hurting the global demand
- Saudi Arabia’s decision to ramp up production results in excess oil supply
Crude oil prices are trading around 19% down on the day following a crash in demand amid the coronavirus outbreak, which is likely to significantly hamper the business activity around the world. The outbreak forces airlines to cancel countless flights as the global travel companies are on the brink of collapse.
Moreover, there is an increase in supply after Saudi Arabia ramped up the production to make up for the losses due to low oil prices. Russia previously refused to agree to a cut in production proposed by OPEC countries.
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As a result, crude oil prices dived to its lowest levels since 2002. The 2002 lows are likely to provide strong support above the $17 mark, should the price action continue to trade lower. A weekly close below the $26 handle could prove to be a major bearish development.