Crude oil price was boosted on Thursday by the better-than-expected US Non-Farm Payrolls data and added more than 2%. However, Friday seems to have brought the markets back to reality as reports of new coronavirus cases continue to be reported in record proportions. Friday’s data from the Florida health department indicates that there are 9,488 new coronavirus cases, an increase of 5.6%. This increase is slightly lower than the 1-week average of 5.8% and brings the total number diagnosed in two days to 19,589.
Such numbers continue to worry investors and analysts, who fear that the current rates of new infections may force new lockdowns that could depress economic indices and the stock markets once more.
Crude oil demand continues to remain at low levels, and only the record output cuts by the OPEC + alliance is shoring up prices. New allegations of compliance cheating have emerged, threatening to derail the output cut program championed by Saudi Arabia.
Brent crude is presently trading at $42.64, which represents a 0.63% drop on the day as prices continue to remain capped below the $44 mark.
Outlook for Crude Oil Price
Crude oil price on the Brent crude benchmark seems to have run out of steam and may need more than just the present output cuts to stimulate a new push towards $50. Presently, Brent crude is posting lower highs, which indicate that the June 2020 price surge may have stalled. Crude oil price is now forming a symmetrical triangle. A break above the triangle also needs to break above the 44.16 resistance to make a break for 48.33 (2 March 2020 low). An advance beyond this level targets the 50.64 resistance, which would mark the first time since March that Brent crude has traded above $50. This advance needs fundamental support which is presently lacking at this stage.
On the flip side, a breakdown of the triangle brings 38.56 into focus, with 35.61 and 31.69 located not too far below. Multi-year lows at 28.38 and 24.68 remain more of a possibility at this stage than the $50 target.
Market fundamentals surrounding the coronavirus pandemic and OPEC’s response to it continue to dominate crude oil price action.
Crude Oil Price Daily Chart (Brent)