- Summary:
- Brent crude price drops steeply as Russia and non-OPEC members withold assent to new production cuts. Renewed coronavirus fears also hit markets.
Crude oil price on the Brent crude benchmark has dropped steeply in Friday trading as there seems to be a delay in reaching a consensus on crude oil output cuts between OPEC’s core membership and its partners. According to reports from Reuters, the non-OPEC member states are meeting separately from the main bloc, and this has created a delay in the general meeting.
These developments came after Russia’s energy ministry stated yesterday that it was prepared to absorb further drops in the price of oil; an indication that it had not provided consent to proposed cuts by OPEC. News outlets had also reported earlier today that Russia had declined its assent to further cuts.
These developments, coupled with Friday’s risk-off sentiment on renewed coronavirus fears, have dealt a further blow to Brent crude price, which is now trading at 47.59.
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Technical Outlook on Brent Crude Price
Following a sharp drop earlier in the day’s trading session, Brent crude has lost nearly 5% on the day, and it is now violating critical support located at 47.91. A confirmed breakdown of this support comes if the weekly candle makes a 3% penetration close below that support. This move opens the door for crude oil price on the Brent benchmark to target the next support at 46.83. Any OPEC statement which confirms a failure to agree to new output cuts could push prices down to 44.16 or even 41.51 (Aug 1, 2016 lows).
On the flip side, a positive OPEC announcement could provide some respite for crude oil price, allowing for a retest of 50.64. 53.26 also lies ahead but requires reduced coronavirus market fears to be attained.