Crude oil inventories may have registered an increase in crude oil stocks of 2 million barrels for the previous week, which was lower than the market consensus of 3.5m barrels stock up, but this has done nothing to stop the massive selloff going on in the crude oil market.
Brent crude price is presently trading in uncharted waters, as it has extended losses for the 3rd straight session. On the day, crude oil price on the Brent crude benchmark is trading 8.68% lower at 26.22, trading at price levels not seen in close to 17 years.
The last time crude oil price traded this low was in November 2002. The latest dips are a result of the Russia-Saudi price war and limitations in international and domestic travel across several countries that have led to a crash in demand that is already severely hurt by the coronavirus-related factory closures in China.
Brent crude price activity is challenging the support level seen at 28.38, which is close to the 2016 lows that resulted at the peak of shale oil production in the United States. The weekly candle needs a 3% penetration close to the downside to confirm the breakdown of the support level. Confirmation of the breakdown opens the door for new lows on the Brent crude price benchmark, which would target the 2003 lows at just above $24, with the 1997 lows of $20 quite visible in the horizon.
On the flip side, price reprieve at the current support may permit a short-term bounce to 31.92 (Feb 2016 and 9 March 2020 lows), with a further extension to 35.61 (neckline of Jan/Feb 2016 double bottom) if the price can find more buying support.
Goldman Sachs has already cut its price forecast for Brent crude to $20 per barrel. It is looking more likely to hit this price level with two weeks to go into the second quarter of 2020.