The prospect of additional crude oil supply is undermining price action on the Brent crude benchmark this Thursday, leading to a 0.4% drop.
This development comes as Saudi Arabia and the UAE reach an agreement on the process of lifting supply curbs. Furthermore, current prices make shale oil production more profitable, which is in tandem with OPEC’s outlook of non-OPEC oil supply growing by 2.1million barrels per day in 2022, led by the US. These scenarios have combined with prices that are now in overbought levels technically speaking, have led to more selling on the day.
The Brent benchmark has seen a breach of the lower border of the ascending channel. This breach found support at the 73.34 price mark, with an intraday bounce initiating a return move that has been arrested at the broken border. If the price is to hit the downside targets at 71.44 and 70.00, there must be a closing penetration below this border with renewed selling.
On the flip side, if the price returns to the channel and closes inside it, that border is preserved. We could then see a bounce from there towards the 75.52 resistance. Above this level, 77.93 and 80.00 remain viable targets to the upside.
