Crude oil price on both the Brent and WTI benchmarks fell again today after Russia denied it was in talks with the Saudi government over the recent price war. These comments have dampened hopes of a US-brokered solution to the crisis, which has seen crude oil take a massive hit in the last month.
Kremlin spokesperson Dmitry Peskov said in a statement picked up by Reuters that the Russian government was not holding talks about the oil markets with Saudi Arabia. However, the spokesman did not entirely close the door on future discussions, saying that “talks with Saudi Arabia could be set up in a timely manner if necessary.”
A separate Reuters report has indicated that Saudi Aramco, the state-owned oil firm in Saudi Arabia, has ramped up production to 12 million barrels per day.
These developments are piling bearish pressure on crude oil prices, which have been shaken by a report from Reuters on Tuesday that detailed a rise in OPEC oil output by as much as 90,000 barrels per day in March. Tuesday’s data from the American Petroleum Institute (API) also revealed a rise in US crude inventories by 10.5 million barrels last week, which far exceeded the market consensus figures of an addition of 4 million barrels.
Another report from Reuters also indicates that the US has scrubbed a planned alliance with Saudi Arabia to stabilize prices. Attention will now shift to the Energy Information Administration’s crude oil inventories report later in the day to get more direction on crude oil price, which is presently lower by 1.7% on the day.
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Technical Outlook for Crude Oil Price
The crude oil price on the Brent benchmark is currently trading at $25.48 in what has been a relatively muted day of trading. Bearish sentiment continues to dominate the market, and this could send crude oil price on the Brent crude benchmark price towards the next support at $22.35. Below this, the October 2001 lows of $16.92 provide additional support. The door towards the 1998 lows at just under $10 per barrel requires a breakdown of the 2002 lows.
On the flip side, any price recovery run could allow Brent crude to target the 18 January 2016 lows of 28.38 initially, with last week’s low of 31.92 (also previous low of 15 February 2016) presenting itself as potential resistance. Any recovery efforts continue to remain limited by the slew of negative fundamentals, which means that sellers may use recovery points as opportunities to sell on rallies.
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