Bearish Brent Crude oil price predictions are playing out in full force this Wednesday, as crude oil prices fell heavily due to demand concerns stemming from the new COVID-19 lockdowns in China. Brent crude was down 3.10 as of writing after China followed up last week’s lockdown of 2.1 million people in Chengdu with further restrictions in Guiyang.
China is the world’s largest net importer of crude oil. Videos of panicked citizens in panic buying ahead of the Chengdu lockdowns only just surfaced online and are adding to a narrative that the impact of the latest restrictions could have far-reaching consequences on demand.
The Chinese situation seems to be winning against OPEC’s 100K barrels per day output cut, which, though announced this week, is yet to kick in. If there is a drop in demand from China, OPEC’s output cut will look like a drop in the bucket.
The sentiment is echoed in ANZ Bank’s analysis of the situation in its latest report, which could solidify the bearish Brent crude oil price predictions. Brent crude is now trading at $89.64, the lowest it has traded since Russia invaded Ukraine on 24 February.
The intraday decline has set up a potential breakdown of the demand zone with 91.32 as its floor. If the 3% closing penetration filter is achieved, the bears would have clear access to the 86.72 support level (25 October 2021 low and 18 January 2022 high).
Below this level, the 16 November and 24 November 2021 highs at 83.12 form an additional downside target before 80.22 (5 November 2021 low) comes into the mix as an additional harvest point. This outlook invalidates the falling wedge pattern.
On the flip side, recovery has to follow a return of price action above the 93.20 price mark, which is the ceiling of the jeopardized demand zone. This scenario gives the bulls the leverage to seek out 97.40 as a touchdown point (15 March low and 19 August high) before 100.92 comes into the picture as a psychological price target (13 July high). 106.11 remains an upside target which looks presently out of reach.
This post was last modified on %s = human-readable time difference 16:48