Crude oil price is falling today as traders digest the latest Libya deal and the falling inventories in the United States. The price of Brent crude is down by 0.45% while that of the West Texas Intermediate (WTI) is down by 0.65%. The two are trading at $41.50 and $39.67, respectively.
Last week, warring factions in Libya entered into an agreement that will see the country boost its crude oil supplies. In the Russian-backed deal, Khalifa Haftar, a general who is seeking more control for the country agreed to life an eight-month blockade on oil fields and ports. As a result, an analysis by the Financial Times estimated that the current production of 100,000 barrels per day could increase to 600,000 barrels within a month.
The increase in Libyan oil supplies comes at a time when most analysts are expecting oil demand to slow. In reports by the Energy Information Administration (EIA), OPEC, and the International Energy Agency (IEA), the demand will drop at a faster rate than earlier estimated. They cited the rising number of new COVID infections in most countries.
Meanwhile, crude oil price is falling as investors react to the US inventories data. According to the EIA, the inventories rose by 1.6 million in the previous week. That price was better than last week’s decline of more than 4.3 million. But it was also worse than the 2.3 million barrels that analysts were expecting.
At the same time, Saudi Arabia has refused to guide on what could happen next. In a statement last week, the country’s minister said that he was not willing to share what the state’s strategy. Also, he said that the price will be jumpy in the near term. He said:
“Anyone who thinks they will get a word from me on what we will do next, is absolutely living in La La Land”.
Brent crude oil price technical analysis
The daily chart shows that Brent crude oil has been relatively weak in the past few days. The chart also shows that the price broke lower two weeks ago after it formed a rising wedge pattern. It is slightly below the 50% Fibonacci retracement level and along the 20-day and 10-day exponential moving average. Therefore, the price is likely to continue falling as bears attempt to retest and possibly move below last week’s low of $39.40. On the flip side, a move above $44 will invalidate this prediction.