Crude oil price on the Brent crude benchmark has gained marginally after a significant drawdown on the crude oil stocks in the US. The Energy Information Administration (EIA) reports that crude oil inventories for the week ended 10 July dropped by 7.5 million barrels; a massive drop from the previous week’s data that showed an increase in the stockpile by 5.7 million barrels. This figure was also a more significant drop than the 1.3million barrels drop that market analysts had predicted.
The data has allowed Brent crude to add 0.6% on the day, up from a flat reading. Crude oil price is now at $43.38 per barrel on a day that the markets are anxiously waiting for the decision from the OPEC+ Joint Ministerial Monitoring Committee (JMMC) virtual meeting. Reuters had quoted an OPEC + source in a report earlier on Wednesday as saying that all ministers are leaning towards a consensus to ease oil production cuts.
The situation from the OPEC + JMMC continues to evolve, and crude oil prices may adjust according to the news as it emanates from the meeting.
Technical Outlook for Crude Oil Price
Brent crude has begun a slow march to the upside, propped up by the rising trendline that connects the recent lows. A test of the resistance at 44.16 looks very likely. If Brent crude breaks this resistance, then the door towards the next resistance at 48.33 opens. Attainment of 48.33 closes the price gap of 6-7 March 2020. Above this level, the $50.64 price target beckons.
However, a rejection at 44.16 increases the odds of a pullback towards 41.43. Below this level, 38.56 and 35.61 may become the new support targets. The 31.69 and 28.38 price levels are multi-year lows and will become relevant to the existing picture if coronavirus cases increase to levels where new lockdowns are implemented, thereby dropping demand to the March/April 2020 levels.