Crude oil prices on the Brent crude benchmark has fallen 4.13% on Monday, as risky assets were sold off this Monday on the discovery of a new strain of the coronavirus in the UK.
The situation has created worries about the demand outlook for crude oil prices heading into 2021, with the situation looking set to worsen further.
OPEC had revised its demand outlook downwards the previous week in its monthly outlook report, but optimism had helped crude oil prices to the pre-pandemic levels of $52 heading into the weekend. These gains seem to have been lost with the current situation from the UK already causing governments in the EU to cancel transport entry from the UK.
UBS oil analyst Giovanni Stauvono echoes the sentiment via a Reuters feed, saying that the restrictions on mobility will not help European oil demand.
Technical Levels to Watch
Today’s steep drop in crude oil price has wiped off 4 days of gains from Brent crude price activity. This move has put the 50.64 support at great risk of collapse. If this happens, we could see 48.33 coming into the picture once more, with 46.41 also serving as an additional downside target.
On the flip side, recovery in price has to come on the back of a break of the 52.67 resistance, and this move would require that bulls prevent the daily candle from closing at a 3% penetration distance below the 50.64 support.