Crude oil price on the WTI benchmark continues to remain capped after the OPEC + alliance decided to ease the output curbs. Daily records in new US coronavirus cases as well as surging infection rates around the world continue to dampen demand for the black gold and has effectively capped prices below the $41 mark.
As cases soar in the US, Australia, Spain and Brazil, there are serious fears that this latest surge could prompt a new round of lockdowns, which would cause demand to drop off to the lows seen in March and April.
The virtual meeting of the OPEC + alliance decided to reduce the output curbs from 9.7 million barrels per day to 7.7 million barrels per day, starting in August. The International Energy Agency (IEA) through its chief Fatih Birol, believes that prices could stay at $40 per barrel in the months ahead, as the market undergoes a slow rebalancing.
Technical Outlook for WTI Crude
The WTI crude oil price is down by 0.88% on a muted day of trading as at the time of writing. The resistance at 40.93 continues to put a lid on any further upside action. A lack of fundamental basis for an upside push could impact prices next week, with rejection and pullback expected to target the 34.81 support level (10 March high and 12 June low).
Below this area, the lows of 10 March and 18 May form a potential support target at 29.78. Further decline to a cluster of lows around early May at 24.94 could follow a breakdown of 29.78.
On the flip side, a recovery towards 44.00 and 49.60 (cluster of lows of early February 2020) is only possible if there is a fundamental influence that pushes up demand. It is presently hard to find a basis for this in the market, but anything is possible.