Crude oil price tumbled on Monday as a result of oversupply concerns and weaker demand. Crude oil production in Norway and Libya have resumed, and this is adding to global supply even as demand continues to falter on the back of rising coronavirus cases worldwide.
Analysts at the International Energy Agency are warning that demand may continue to remain low as the coronavirus pandemic continues to rage. Adding to pressures is the restart of production in Libya’s biggest oil field after a truce was reached in the fighting a fortnight ago.
The Commitment of Traders report also showed that speculators had increased their net shorts. Open interest on crude oil futures markets fell for the 4th consecutive trading session on Friday, according to data monitored on the CME Groups exchange. The volume also diminished by at least 362.8K contracts, allowing the crude oil price on the Brent benchmark to fall by 3.02% on Monday to $41.48 at the time of writing.
Technical Outlook for Brent Crude
The drop in the last two trading sessions is a classical pullback from the upper border of the channel, as the price continues to oscillate between the upper and lower boundaries. This puts crude oil price on the Brent benchmark in a range-bound position.
Crude oil price currently tests the support at 41.43. A breakdown of this support as crude continues to find its way to the lower channel border, opens the door towards the 39.57 support. A drop below this support also degrades the channel’s lower edge, bringing in 36.40 as the next target to the south.
On the flip side, a bounce from 41.43 or 39.57 continues the price oscillation within the channel’s consolidation area. Only a break of the 44.16 resistance allows Brent crude to aim for 45.39, with 48.33 and 50.64 remaining valid as potential upside targets.