WTI bounces off multi-year low, but still under $18.00, after PBOC rate decision

• WTI pulls back from the multi-year low following the PBOC’s rate cut.
• Risk-off returns to market following weekend data concerning the coronavirus.
• Virus updates remain as the key driver.

Having dropped to the lowest since 1999, WTI bounces off to $17.73, down 3.65% on a day, amid the initial Asian session on Monday.

While the early-day risk-off and broad US dollar strength seem to have paved the way for the black gold’s drop, the recent rate cut from the People’s Bank of China (PBOC) is likely behind the energy benchmark’s pullback moves.

The PBOC recently cut one and five-year loan prime rates to 3.85% and 4.65% versus respective prior of 4.05% and 4.75%.

Earlier during the day, markets turned risk-off following Reuters tally suggesting the US death toll, due to the coronavirus (COVID-19), surged beyond 40,000.

The oil price weakness could also be attributed to the global oil producers’ inability to offer large output cuts as initially estimated. It's worth mentioning that the alliance between OPEC. US, Canada and Russia agreed for 9.7 million barrels per day (bps) of production cut, versus widely anticipated 20 million (bps), during the early-month.

Technical analysis

WTI prices are inching closer towards January 1999 top surrounding $13.80, with a $10 psychological magnet on bears’ radar afterward. On the contrary, a short-term falling trend line near $18.40 restricts the immediate recovery moves of the black gold.