After rising for five straight weeks, the Brent crude oil benchmark opened lower ahead of the OPEC + meeting, as bulls took some profits off the table.
Crude oil prices are currently down 1.81% after the Brent crude and WTI benchmarks came under selling pressure in the New York session.
The OPEC + alliance meets this Thursday to decide on the price management strategy in the future. After crude oil price fell to record lows a year ago at the height of the coronavirus pandemic, the alliance had instituted curbs on production, which were lifted marginally in the last meeting. These curbs, along with resurgent demand, have helped crude oil price above the $75 price level.
A Monday report by Reuters says that the oil cartel forecasts a supply deficit of 1.5 million barrels per day from August. This could give the alliance some room to increase production by more than the 500,000 barrels per day forecast by some major news outlets last week. This report triggered the selloff seen on the day.
Technical Levels to Watch For
The drop seen on Monday comes as a result of rejection at the channel’s upper border. The pullback move has violated the 75.52 support level but needs to decline below the 74.64 minor support that has served as the pivot for the daily candles of June 22 to June 28. A closing penetration below this point confirms the breakdown of 75.52 and opens the door towards 73.34. A further decline takes out the channel’s lower border, clearing the way for 71.44 and potentially 70.00 to return to the limelight.
On the other hand, bulls need to force price above 76.56 (June 28 high) and the channel’s upper border for 77.93 to come into the picture. This would create a new 2021 high and attain a previous high seen on October 26 2018. Above this level, the 80.00 psychological resistance and October 23 2018 high becomes a new target to the north.