Crude oil price on the Brent benchmark fell steeply on Monday after China’s slump in manufacturing activity sparked concerns over a slowdown in global demand. The rapid spread of the more contagious delta variant of COVID-19 and a tanker incident in the Middle East is adding to these worries.
More nations are applying restrictions as the case counts of the delta variant of COVID-19 mount. This factor is sparking off a return to lower demand for crude oil. Adding to these fears is China’s decline in manufacturing activity in July, sparking new demand concerns from there. A drone attack on an Israeli privately-owned oil tanker that in the Arabian Sea is also stirring new tensions, with the UK and US accusing Iran of masterminding the attack. Downing Street has summoned the Iranian ambassador to answer some of its questions regarding the incident.
Crude oil price on the Brent benchmark is down 3.09% as of writing.
Technical Outlook for Crude Oil Price (Brent)
The 2-day decline on Brent crude comes off the rejection of price at 75.52. The ascending channel’s lower edge also provided an extra barrier for this rejection. Monday’s decline has violated the 73.34 support but needs a confirmation of the breakdown of this area to open the door towards 71.44 and potentially 70.00. Only a dissection of the redrawn trendline that connects the 25 March, 6 April, 21 May and 20 July lows leads to a deeper correction towards 67.74 and 66.81.
On the flip side, recovery from a failed breakdown of 73.34 provides an opportunity to retest 75.52 once more. A break of this barrier leads the way to 77.93 and a potential run to 2021’s high at 80.00.