Oil prices are falling today as traders continue worrying about demand and the surprise increase of inventories in the US. Brent is trading at $43.05, down by 1.10% while West Texas Intermediate (WTI) is trading at $40.50.
The biggest concern for oil prices is demand as the number of Covid 19 cases continue rising internationally. In the United States, the number of cases has continued to surge, making November the worst month. Just yesterday, the country confirmed a record 142.8k new cases, pushing the total to more than 10.6 million. The same trend is going on in most countries, especially in Europe.
As a result, in its monthly report yesterday, the EIA said that demand will continue lagging in most countries.
At the same time, oil prices are falling in reaction to a surprise increase in inventories. According to the EIA, the number of inventories in the US rose by more than 4.278 million last week. That was a surprise reading considering that a report by the American Petroleum Institute (API) showed that inventories fell.
Finally, crude oil prices are falling because of profit taking considering that the price had risen by more than 29% from Monday last week to Wednesday this week. In a statement, an analyst at Daiichi said:
“Oil prices are expected to stay under pressure next week if the spread of the pandemic continues to accelerate in many parts of the world.”
Brent crude oil technical outlook
On the four-hour chart, we see that Brent crude oil has dropped from this week’s high of $45.25 to today’s low of $43.00. The price is slightly above the important resistance of $43.20. It is slightly below the 25-day and 15-day moving averages. Therefore, the price is likely to continue falling as investors target the next support at $42.50. However, a move above $44 will invalidate this trend.
Oil prices technical chart