Crude oil price on the Brent benchmark suffered steep losses in Monday trading, as China posted an abysmal drop in factory production data. Factory production fell by 13.5% as against the market consensus of 3.5%, which was the most significant drop in this metric since January 1990. The dismal report showcases how badly the coronavirus outbreak has impacted factories in China, and this has led to a steep drop in demand for risky commodity assets such as copper, crude oil and palladium; all of which also suffered massive selloffs on Monday.
Crude oil price on the Brent benchmark is currently trading at $30.88 per barrel, well below Friday’s close of 34.71. The coronavirus outbreak has also prompted the cancellation of the OPEC+ technical committee meeting which was scheduled to hold this week in Vienna.
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Technical Outlook for Brent Crude Price
Brent crude price’s bearish action has torn through several support levels and now aims for the 28.38 support area. However, Brent crude needs to break the 31.92 price level (15 February 2016 lows) very decisively. If this breakout move fails, then there could be a chance for price to bounce on that support and aim for the 35.61 resistance (neckline of the Jan/Feb 2016 double bottom). The 1 August 2016 low at 41.43 could also become a relevant resistance if the price recovery can gain some momentum.
The sentiment continues to remain bearish, and the crude oil price may still drop further downside towards the nearest support targets before price pullback to the upside.
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