Crude oil price on Brent crude followed global stock markets and other risky assets lower on Tuesday fears of the spread of the coronavirus ahead of the Chinese New Year hit the markets. The risk-off sentiment induced by the spreading coronavirus infection also comes on the back of yesterday’s ceasefire declaration by warring Libyan factions at the Berlin summit, beating back on the fears of a supply disruption which followed the shutting of two oil pipelines in Libya over the weekend.
As a result, Brent crude is trading at 64.74, off the intraday lows of 64.08 but still lower than the intraday high of 65.32.
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Technical Outlook for Brent Crude
Crude oil price action for this week on Brent crude variant has taken the asset below the channel’s lower border on the daily chart. However, the breakdown is still struggling to convince after the downside move stalled at the initial support level of 63.71, which lies just under the channel. This is despite the pullback to the broken lower border which was rejected on Monday and reinforced by yesterday’s pinbar candle.
Brent crude would need a more definitive close below 63.71 to be able to target the 60.26 price level, where the previous double bottoms of June/July 2019, as well as the low of 29 November 2019, are found.
On the flip side, if the Brent crude oil price benchmark is unable to breach 63.71, this could prompt price re-entry into the channel where a retest of the 66.98 resistance level could play out. The 27 May 2019 and 6 January 2020 highs at 70.85 are another possible pitstop for any price recovery move towards the channel’s return line.