The FOMC minutes added to crude oil price woes on a Thursday that witnessed a rout in commodities due to the return of risk-off sentiment. Crude oil price on the Brent benchmark suffered the 6th day of losses, failing to hold a crucial three-month low as the US Dollar gained strength from a combination of the Fed’s decision to taper early and investors’ flight to safety.
Crude oil price has been facing headwinds since last week’s announcement by the IEA on a stall in crude oil demand. Rising COVID-19 Delta cases and poor factory data from China, coupled with a slowdown of Chinese crude oil imports, have been an overriding factor that has sent the bulls scurrying out of the arena.
Brent crude fell more than 1.3% on the day, and could extend losses if the current support at the $65.95 mark fails to hold firm.
The slump in price has violated the support at 65.95. If the price closes below this support by a 3% penetration, the breakdown of this level is confirmed. This scenario would permit the 26 April/21 May lows at 64.64 to come into play. A further decline brings in 62.33 and 60.07 into the picture.
Conversely, crude oil price needs to clear 71.44 and the redrawn trendline now acting as a resistance to give Brent crude a realistic chance of recovering to the 2021 highs at 77.82. This would require Brent crude taking out 70.01, 73.44 and 75.52 along the way.