Crude oil price on the Brent crude benchmark looks set to extend the slide this week as new pressures arise on the supply and demand sides of the equation.
Supply-wise, prices on the Brent crude benchmark could face some pressure as last month’s decision by the OPEC+ alliance to partially lift some of the output curbs put in place earlier in the year starts to get implemented this month. The previous production curbs of 9.7million barrels per day, which was set in May and helped prices to recover from sub-20 dollar levels, have been reduced to 7.7 million barrels per day. The new production limit will run from August to December 2020.
Crude oil prices are also facing renewed headwinds on the demand side of the equation, as the rising number of coronavirus cases globally could renew demand outlook concerns. Spain, the UK and several other countries have witnessed an uptick in infection rates in the last week. Failure to control the spread of the coronavirus could continue to place a cap on crude oil demand in the foreseeable future. Brent crude oil price is down a modest 0.41% as price action continues to hover around the $43 mark.
A fundamental influence on Brent crude is expected to come from the US manufacturing PMI data later today. Wednesday’s crude oil inventories report from the US Energy Information Administration could also make for an exciting read.
Outlook for Brent Crude
Brent crude oil price remains capped at $44.16, which has served as the resistance since June. Only a break of this level to the upside will allow Brent crude to aim for 48.33, with 50.64 also remaining relevant as a resistance target.
On the flip side, if the fundamentals kick in as expected, we could see a pullback from current levels towards the 41.43 support level, with 38.56 and 35.61 remaining in focus as possible distant downside targets if the decline extends below 41.43.