The Coronavirus outbreak in Wuhan, China, had increased its spread in a short period of time and had a great impact in developed and emerging countries. Due to outstanding numbe of cases and death, especially in the first quarter of 2020, public authorities aimed to control the pandemic through quarantine practices. In this direction, energy demand fell sharply. As of February, crude oil prices continued to decline, while increases in number of cases continued in developed countries.

The Coronavirus outbreak, declared a pandemic by the World Health Organization (WHO), had its biggest impact on global markets in March. The enormous increase in cases and death rates led to the contraction in energy demand and price of crude oil fell to $ 8 per barrel. Thanks to some support led by the manufacturing sector, which was supported by high emissions from developed and developing countries' economic authorities, the black gold recover to $ 30 in April.

In April, the Organization of Petroleum Exporting Countries (OPEC) decided to reduce daily crude oil production by 10 million barrels, and the balancing process that began in crude oil prices with a relatively reduced demand shock caused by the pandemic continued with the opening of economic activities in developed and developing countries as of the second half of the year.  Crude oil prices had been fluctuated between $ 34 and $ 42 in Q3 2020. Although it remained under some pressure with the new wave experienced on a global scale in the last quarter of the year, crude oil found strong support from the vaccine news coming from various pharmaceutical companies such as Moderna, AstraZeneca Sinovac, and Pfizer/BioNTech and Pfizer, and reached $ 50 per barrel.

Although the number of cases continue to increase all around the world, start of the vaccination against coronavirus in countries with the world's largest economies, as well as the implementation of ongoing quarantine measures in many countries without disrupting the supply chains lead to the expectations that energy demand will increase in 2021. As a matter of fact, prices for 2021 crude oil contracts also support these expectations. On the other hand, it is also possible to expect that OPEC will not be in a hurry to update the amount of supply in 2021, creating upward pressure on crude oil prices in the face of demand, which is also expected to increase. In addition, expansionary monetary policies of developed countries' monetary and financial authorities support the manufacturing sector. And this is also supportive in terms of crude oil prices.


Technically, crude oil, which had showed a strong recovery thanks to the purchases in response in April, held at the ascending trendline after some loss of momentum, and moved its recovery into the minor price channel. Unless 47.00 support and the lower barrier of the channel are broken, retracement movement will not be possible to be observed in the short run. And in line with its positive outlook, if the psychological resistance of 50.00 is exceeded and followed by permanent closes, 51.60 and 53.00 resistance levels will be on our radar. If the commodity gets below 47.00 level, 45.40 and 44.00 supports will be on our radar. In this case, however, crude oil prices may raise again thanks to the new responses.