The spikes seen in new coronavirus infections across the world has prompted recent lockdowns in several countries, causing new concerns about an already damaged energy demand outlook. This is weighing heavily on crude oil prices this Monday, with a barrel of the international Brent crude benchmark now trading at $40.44 at the last count, losing nearly 3% on the day.
Reuters quoted the Secretary-General of the Organization of Petroleum Exporting Countries (OPEC), Nigeria’s Mohammad Barkindo as saying that “the economic and oil demand recovery remains anaemic.”
Crude oil price retained its bearish tone on these comments in the New York session.
Technical Outlook for Brent Crude
Today’s downside move is an extension of the rejection and consequent selloff from the descending channel’s upper boundary, which has breached the 41.43 support level. If this break exceeds the 3% closing penetration point to the downside, the next target will be the 39.57 support. 36.40 beckons if the channel’s lower boundary gives way.
On the flip side, recovery of crude oil price depends on passage of the US stimulus bill and easing of lockdowns. If this is the case, then we could see buying momentum around 39.57 (previous lows of 11-16 September), with 41.43 and 42.50 being the immediate targets to the north. A break of the channel’s upper edge is required for the Brent crude oil price action to target 45.39 and beyond.
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Crude Oil Price Chart: (Daily)
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