Crude Oil Price Could Drop Below $70 On OPEC+ Impasse, COVID-19 Delta Variant

Crude oil prices on the Brent benchmark have headed lower this Monday after growing worries about the OPEC + impasse and the global spread of the Delta variant of the coronavirus.

The OPEC + alliance postponed its meeting without a consensus after Saudi Arabia and the UAE disagreed over how to lift the production curbs that were put in place last year to shore up prices after demand collapsed due to the pandemic.

The recent spread of the highly transmissible coronavirus delta variant has reignited concerns that demand could drop off if new lockdowns are implemented. A delay in the reopening of economies already in lockdown could also cause demand concerns. As such, Brent crude fell 0.64% on the day.

The fll in crude oil prices was limited by the joint statement of Saudi Arabia and Oman, calling for improved cooperation among OPEC + members. The statement fuelled hopes that a consensus between disagreeing members could be reached soon, limiting selling on the Brent benchmark.

Brent Crude: Key Price Levels

Monday’s decline tested the support provided by the channel’s lower border. A breakdown of this border and the 73.34 support is required to initiate a run towards 71.44 (8 March high). This move positions 70.01 and 67.74 to serve as additional targets to the south if the correction is more extensive. 

On the flip side, a bounce and advance from the current support allows crude oil price to retest 75.52, with 77.93 and 80.00 lining up as potential upside targets. Attainment of the latter forms a new high for 2021 and allows for a continuation of price recovery. 

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Brent Crude: Daily Chart

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