Crude Oil Price Falls Sharply As Crude Oil Inventories Pile Up
Crude oil price on the Brent benchmark has fallen sharply this Wednesday after renewed fears of the second wave of the spread of the coronavirus hit the markets. Brent crude oil price fell 5.2% as at the time of writing, and is not trading at $40.13. A small increase in crude oil inventories by 1.4 million barrels versus the previous figure that showed a 1.2million barrel increase, did nothing to help the sentiment in the market.
According to data from the Energy Information Administration, US crude oil refinery inputs averaged 13.8 million barrels per day last week, exceeding the previous week’s average by 239,000 barrels per day. Total product supply fell 17.0% on a year-on-year basis, showcasing the dropoff in demand brought on by the coronavirus pandemic.
The daily chart showcasing crude oil price on the Brent benchmark indicates that the price hit the 44.16 resistance on Tuesday, and was forced down from that point, extending the decline into today’s price action. This decline has breached the 41.43 support (previous highs of 9 June and 17 June 2020).
A confirmed breakdown of 41.43 (via a second consecutive candle close below this area), opens the door towards 38.56. Further decline would bring 35.61 into the picture.
On the flip side, failure to confirm the breakdown of 41.43 could allow for a bounce in crude oil price, which would retest the 44.16 resistance. A breakout would open the gateway towards 48.33 (previous low of 3 March 2020), with 50.64 also becoming relevant if buying pressure is good enough to sustain a more vigorous advance.