Demand concerns over the rising coronavirus cases in India and other net importers of crude oil continue to push the decline in crude oil prices. This Friday, the crude oil price Brent benchmark is down 0.5%.
Crude oil price, which opened the week at $66.68 on the Brent benchmark, currently trades at $65.30 (as of the time of writing) and looks set to close the day and the week lower.
India set a new coronavirus infection rate on Thursday, as the country struggles to reign in the virus. Also adding to the downward pressure on crude oil prices is a report that indicates that a nuclear deal with Iran could be in place by May. Such a deal would mean that Iran would be off the US sanctions list, allowing it to flood the market with an extra 2 million barrels per day.
Such a supply surge could further pressurize prices, which assumed a downward spiral after the OPEC + alliance decide to reduce production curbs as from May.
Technical Levels to Watch
The rejection at 65.95 following yesterday’s gains, allows crude oil price on the Brent benchmark to resume the slide towards the flag’s lower border. This move would look to initiate a potential breakdown and bearish continuation below 60.00. Price needs to break down the 64.26 and 62.21 support levels, which allows the price to target completion of the bearish flag’s breakdown at 57.47. The 60.07 psychological barrier needs to give way for this to happen.
On the flip side, invalidation of the bearish outlook occurs if crude oil price breaks above 67.74. This move would not only breach the upper border of the flag but would also take out a recent high (20 April high), enabling the price to target the 70.01 psychological resistance. A further advance brings 71.44 into the picture. This sequence of upside moves may come from a bounce on the channel’s lower border, at its interaction point with the 64.26 support.