Brent crude oil price continues the correction from five-month highs as the U.S. Gulf Coast refineries return to production. The stronger USD in the last two sessions also weighs on the crude oil price. Mixed economic data from Europe failed to impress investors as the rising new infections in the old continent continues to rise, and many countries impose new restriction measures.
European Monetary Union Retail Sales Below The Expectations
European Monetary Union Retail Sales yearly reading came down to 0.4%, well below the forecasts of 3.5%, while the monthly reading dropped to -1.3%, below the estimates of 1.5%.
The U.K. Markit Services PMI reported at 58.8 below the expectations of 60.1 in August, and France Services PMI came in at 51.5, slightly below the estimates of 51.9. On the other hand, the European Monetary Union Services PMI registered in at 50.5, beating the expectations of 50.1. The Germany Services PMI came in at 52.5, also above the forecasts of 50.8 in August.
Oil traders ignored the lower inventories reported yesterday by the U.S. Energy Information Administration, and the Abu Dhabi decision to cut crude supplies by 30%. The U.S. crude oil inventories declined by 9.4 million barrels for the week of August 28.
Brent Oil Price Daily Technical Analysis
The technical picture for crude oil price has deteriorated since my last article: Brent Crude Oil Price At Five-Month Highs. Is this the Beginning Of A Leg Higher?
The last two days sharp correction has cancelled the recent positive momentum. The first sign of weakness came up when the crude oil price failed to break above the 200-day moving average the previous week. Today’s move and the break below the 50-day moving average might be the beginning of further correction towards the $40 mark.
Crude oil is 2.22% lower today at $43.37, making fresh monthly lows. If the Brent crude oil price settles today below $43.90 then might challenge $41.37 the low from July 30. Next support would be met at $39.50 the low from June 25.
On the upside, the 50-day SMA would be the first hurdle at $43.90. More sellers would emerge at $44.55 the daily top. A break above $44.55 would pave the way for the 200-day moving average at $45.31.
Brent Crude Oil Daily Chart