Concerns about the 2nd wave have been raised following the re-reporting of record case numbers in many developed and developing countries in the outbreak of novel coronavirus (Covid-19). The effects of the first half of the year, when energy demand declined sharply, have not yet stopped in the markets, as a result of economic activities that have been minimized by the harsh quarantine measures implemented by public authorities globally.
The demand shock experienced after the novel coronavirus pandemic that occurred in Wuhan, China, was declared as a pandemic by the World Health Organization (WHO), caused spot crude oil prices to decline to $ 8.12 per barrel. Then there was a steady recovery, with the Organization of Petroleum Exporting Countries (OPEC) deciding to cut daily crude oil production by 10 million barrels and the shock of the outbreak relatively easing. With the second half of the year, in the context of controlling the pandemic in many developed and developing countries, the demand for the relatively recovered after the reopening of economic activities, the current supply amount and crude oil balanced in the band of 35 – 43 USD in the last 6 months.
In the last quarter of the year, new restrictions were again raised after a record number of cases were recorded on a daily basis in developed and developing countries. In the USA, the world’s largest oil producer, despite the total number of cases exceeding 9 million in the pandemic and the number of infected people peaking on a daily basis in recent days, President Donald Trump’s frequent emphasis that they will not close the economy again built a barrier to tough measures. However, while many OPEC member countries are struggling with the second wave of the pandemic, the locomotive economies of Europe, such as Germany, France, Italy and Spain, resorted to restraints in order to limit the pandemic. In addition, concerns that global economic activities, which recovered especially in Spring and Summer, might be interrupted again, creating a downward pressure on energy prices. Then spot crude oil prices also pushed the nearly 10-day loss closer to 16 percent.
As with the first wave of the outbreak, global curfews are not yet on the table in current conditions, but the fact that Europe, which has become the new center of the outbreak, is followed by other developed and developing countries in the coming period could increase downward pressure on global energy demand in the last quarter of the year. However, even though the shutdowns do not occur globally, considering that the strongest economies in general struggling with the pandemic will prevent a sharp increase in energy demand, it is possible to say that there will not be a strong increase in crude oil prices under current production conditions.
Technically, we observed that the main rising trend, coming from March with sales-weighted transactions in the recent period, was broken. Crude oil, which continues its retreats and ends the intermediate ascending channel, can accelerate its value losses to 33.20 and 31.80, in case, it can break the minor after 34.70 support, becoming permanent below the lower boundary line of the channel in line with the negative outlook that it has given its sign. In possible upward attempts of the commodity to recover, 37.40 and 38.80 resistance levels will be on our radar.