Crude oil prices are trading sideways after the plunge in Thursday’s session. The drop in prices followed a series of bearish news over the past week. To start with, the rise in US crude oil inventories came as a surprise to investors who have been betting on the recovery of global oil demand. According to the EIA, the weekly stockpiles rose by 2.396 million barrels.
The surge in US 10-year bond yields, and subsequent strengthening of the US dollar has further fuelled the decline in crude oil prices. The yields are currently at around 1.700%, which is a pull back from the 0ne-high of 1.754% reached on Thursday. High treasury yields offer support to the greenback. The resultant strengthening of the US dollar has made crude oil expensive for the investors holding other currencies.
Brent futures have also felt the impact of the vaccination challenges in Europe. Despite European nations like France and Germany resuming AstraZeneca vaccinations, lockdowns in Paris suggest that the region is not out of the woods yet.
Crude oil Prices Technical Outlook
WTI crude oil prices are on a consolidation pattern after dropping by about 11.28% in Thursday’s session. It is currently trading along the previously hit support level at around $59.30. This is an indication that the sideways trading may continue in the near term. Besides, the US oil benchmark is trading below the 20 and 50-day exponential moving averages. A drop past the current level would confirm that the bears are in control of the market and that a downtrend is on course.
However, depending on the fundamentals, the bulls may manage to push the crude oil prices higher. If that happens, the target will be the psychological level of $62. Further up, the prices will be targeting the prior resistance level of around $64.50.