Crude oil prices are trading lower for the 4th straight day after the Head of the International Energy Agency (IEA) Fatih Birol hinted on Tuesday that the organization could lower its global oil demand forecasts.
According to IEA’s Birol, global crude oil demand was at its lowest levels in a decade, noting that the situation could force the IEA to cut its crude oil demand growth forecasts even lower. These comments put further pressure on Brent crude price and the crude oil price of the WTI variant, which were already feeling the heat from the coronavirus-induced risk-off sentiments that hit the markets on Monday.
The reaction of crude oil prices was as expected: they are trading lower, but not by much on the day. As at the time of writing, the Brent crude price was at intraday lows of 56.00. The crude oil price on the WTI was 0.3% lower at 51.18.
Crude oil prices are also feeling the impact of the decision by OPEC+ not to call an earlier meeting to discuss production cuts after Russia opposed the move.
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Technical Outlook for Brent Crude Price
Crude oil price on the Brent crude variety continues its descent from point D of the bearish Gartley pattern, seen on the daily chart. The downside move on the day appears capped after a slight recovery yesterday that was initiated by the bounce on the 55.59 support level. This price area remains a critical support level for the short-term.
A breakdown of 55.59 opens the door for further price descent to the low formed at point C of the pattern, which is the 53.26 support level. Further decline sends Brent crude price to 50.64, which is a low not seen since 24 December 2018.
However, price recovery from 55.59 provides temporary upside relief which targets 57.47. 58.69 and 60.26 remain relevant upside targets for a recovery rally. However, the fundamentals remain bearish, and recovery may end up short-lived as long as the fundamentals stay the same.