Crude oil price on both the WTI and Brent benchmarks are sliding today as a variety of fundamentals continue to crush crude oil prices today. Any chances of an uptick from the OPEC + agreement to cut 10 million barrels of crude oil production per day have quickly eroded as concerns about overstretched storage facilities and some of the lowest demand for crude oil in years continue to weigh on the price.
The coronavirus outbreak is far from being contained in many countries, and last week’s GDP figures from China indicate that demand from China is yet to pick up, despite data provided by the Chinese government which suggests that the local outbreak is slowing.
The crude oil market may have to wait until the May implementation date of the OPEC + agreement to see if this will curtail the slide in crude oil prices. The potential for a discussion on further cuts in production cannot be ruled out, if off crude oil price falls into single-digit territory.
Brent crude is currently trading at 26.50, down 6.29% on the day and as much as 48.26% in April 2020; representing the steepest percentage price drop in any single month in decades. Price continues to trade within the context of the descending channel, and further descent could take Brent crude towards the intersection of the lower channel border and the horizontal support marked by the lows of March 19, March 23 and April 1 at 24.68. A breakdown of that support level clears the pathway towards the November 2002 lows at 22.35.
A bounce off 24.68 could allow Brent crude to target 28.38, a price level that could also serve as the point of intersection with the upper channel border. Therefore, the price needs to break the resistance and the channel’s upper boundary to have a chance at targeting the resistance range found between 31.69 and 32.48 (23.6% Fibonacci retracement from the swing high of January 20 to the swing low of March 30).