Crude oil price on the Brent benchmark is extending losses into the second day after the better-than-expected non-farm payrolls report released this afternoon by the Bureau of Labor Statistics. Crude oil price had initially spiked on Wednesday following the bomb blast in Lebanon that was initially feared to be a terrorist attack. The Lebanese government has since dispelled this notion and indicated that the source of the explosion was a large cache of ammonium nitrate, stored in the port area of Beirut. The Lebanese government’s announcement immediately took away bullish momentum from the asset, allowing the bears to take control. Overriding fundamentals for crude oil price remained bearish after the OPEC + alliance opted to reduce the production output by two million barrels per day until December 2020. Saudi Arabia and Iraq have stressed that they are fully committed to the new output deal. Rising coronavirus cases are also a concern for oil traders, with India (a major oil consumer) and the US reporting an increase in coronavirus cases. Further bearish pressure was applied by the Non-Farm Payrolls data, which was seen as positive for the US dollar. The US dollar is gaining across several commodity pairings such as gold, silver, platinum, copper and crude oil. Crude oil is currently trading at 44.47, Just above the long-term resistance and support at 44.16 to remain on course for a bearish end to the day.
Technical Outlook for Crude Oil Price
Short term price action on Brent crude is evident in the 4-hour chart, where we can see that price action for the day has been bearish and is now testing intraday support at the R1 pivot level (44.55). The ascending trendline that covers the lows of the last one week also intersects this level, further adding credence to this intraday resistance level.
A breakdown of this price level allows the price to push towards the 44.16 price level initially, with the central pivot and S1 pivot at 43.00 and 42.05 providing further props to price. Medium-term support at 41.43 could also come into play (low of 30 July).
On the flip side, a bounce on existing support could push the asset towards 45.39, close to the location of the R2 resistance. A move to 48.33 requires some strong bullish fundamentals in the market.