Hopes that have been driven by US stimulus remain the main factor supporting crude oil price on the Brent benchmark. However, crude oil price is now facing significant headwinds. So far, vaccine rollouts are yet to stem the tide of the coronavirus outbreak, with further lockdowns in Beijing and Europe placing doubt on the recovery of demand.
Last week’s data from the Energy Administration Information (EIA) showed a huge overstocking in crude oil inventories. The same situation was also seen in the inventories report of the American Petroleum Institute (API). These data sets and the coronavirus lockdowns are pressurizing crude oil prices this Monday.
Brent crude is 0.71% higher on the day but is well off intraday highs.
Technical Levels to Watch
The ascending support trendline remains relevant to the current price picture. A bounce of price on this line allows crude oil price to retest the resistance at 56.47. A break above this area allows for a retest of the 57.47 price level. Above this area, 60.07 and 62.21 are additional targets to the north.
On the flip side, the declining tops could be a sign that upside momentum has stalled. A breakdown of the trendline brings 53.99 into the picture. Further weakness could allow price to break towards 52.38, with 50.64 and 49.22 also lining up as additional targets to the south.
Brent Crude; Daily Chart