Crude oil inventories as reported by the Energy Information Administration topped 4.3million barrels in the week ended October 23, which far exceeded the expectation of addition of 1.5million barrels. This was also a surplus that dwarfed the previous week’s deficit of 1.0 million barrels.
The oversupply in crude oil stocks served to confirm the intraday bearish sentiment on crude oil price on all benchmarks, brought on by risk aversion on the back of a surge in coronavirus cases in Europe and the US. This massive wave of coronavirus infections has necessitated the announcement of new extensive lockdowns in France and Germany.
Crude oil prices on the Brent benchmark are down 4.28% at the time of writing and looks set to hand the international benchmark its third losing day in four.
Technical Outlook for Crude Oil Prices (Brent)
Brent crude’s daily candle has violated the 39.57 support line but is yet to deliver the confirmation of a full breakdown of that price level. As it is, a 3% penetration close below this level by the daily candle takes crude oil price below the lows of 2/3 October, which is enough to confirm the breakdown of the 39.57 support. This move opens the door towards the channel’s lower border, somewhere around the 38.00 psychological price level. A breakdown of the channel’s lower boundary allows sellers to target 36.40, with 33.83 and 31.06 forming additional price targets to the south.
A bounce on the 39.57 support line may be the consequence of non-confirmation of the break of that level. We may also expect a similar response on the channel’s lower edge if selling momentum falters.
This allows for price to target 41.43 and possible 42.50, as price oscillates towards the channel’s upper edge.
44.16 and 45.39 are only achievable if risky sentiment re-enters the market in a manner that is strong enough to promote a break of the 42.50 resistance.
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Brent Crude Price (Daily) Chart
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