Crude Oil Price Falls 2% After China’s Factory Output and Local Refining Drop

Crude oil prices fell on Monday amid growing concern that the delta variant of the coronavirus is starting to affect the demand outlook. This follows the IEA report on Friday that demand had stalled and also follows dwindling crude oil imports by China, the world’s largest crude oil importer. 

Data released in Monday’s Asian session shows that retail sales and factory output in China fell sharply in July. New lockdowns to combat fresh COVID-19 outbreaks in many parts of China are being blamed. Local crude oil refining in China also fell to 15-month lows. 

The latest CFTC Positioning Report indicates that speculators reduced their futures and options positions by 21,777 contracts in the week ended August 10. Crude oil prices are down by 2.19% on the day. 

Technical Outlook for Brent Crude

The active daily candle has broken below the 70.01 support and the dotted ascending support trendline. This move opens the door towards the 67.74 support, recently tested on July 20 and August 9. Below this level, the 66.81 and 65.95 support levels become additional targets. 

Conversely, recovery on the Brent crude has to follow a price return above the trendline and the 70.01 price mark, now functioning as a resistance. 71.44 and 73.34 would become the new targets to the upside. The 75.52 barrier only becomes available if 73.34 is taken out. 

Crude Oil Price (Brent): Daily Chart