Crude oil price action may be in for a sustained slump if the current market sentiment is anything to go by. Brent crude price is enduring another day in the dumps, as it tumbles below the $50 mark in an Antipodean-style fall. Currently, Brent crude price is just shy of the 49.38 level as at the time of writing, with the WTI variety down below $45.
A combination of negative fundamentals, as well as rumours of a severe slump in Chinese demand due to the coronavirus, have hit crude oil prices. The markets would now be looking towards the March 6 meeting of OPEC+ for some action to salvage the situation.
It is now looking more likely that the unexpectedly severe nature of the slump in crude oil prices may force the hand of OPEC+. Deeper production cuts may be the only card that the OPEC + group may have. However, it remains to be seen if Russia may be panicked enough to support any measures taken to deepen production cuts even in the face of falling demand.
So far, rumours of a drop by at least 1 million barrels per day have done nothing to stop the fall off the precipice.
Presently, Brent crude price has pushed below the 50.64 support. However, this move requires the time filter confirmation (double successive candle penetrations below the support) for the path towards a new support target somewhere around 47.91 (previous lows of September 2015). 46.82 and 44.16 being the next support areas of interest if the price slump continues.
A transient recovery due to profit-taking by sellers may provide some relief, especially if the present daily candle and that of Monday do not close below 50.64. In this case, we can expect 53.26 and 55.59 to remain the nearest support-turned resistance targets.