Crude oil prices ended the last trading session on a bearish note. Growing concerns on improved crude oil output amid a shortfall in energy demand reversed all the gains recorded in the energy market over the past few weeks.
Both International oil benchmarks had their forward curve widened last week, as seen in Dec. crude oil contract revealing a high amount of crude supplies at the spot market
Crude oil traders are pulling back long bets, as COVID-caseloads flare-up in various parts of major global economies threatening a rebound in energy demand as OPEC+ increase crude oil production after easing their historic output cuts last month.
Oil traders, are also aware of the recent bearish hold, as prices of Brent crude trades below the $42.50 per barrel, breaching the $45 critical support level on Friday
Now that Brent crude oil is back towards the $42 support level, showing crude oil bulls failed to keep the price of technically above the $46 price level partly triggered with the U.S dollar rebounding from its two year low.
That said, attention is now focused on the prevailing macros, affecting crude oil demand/supply rebalancing as prices approach the $40 support level, as bearish bias got triggered when recent data showed U.S gasoline demand dropped momentarily.
The next support level crude oil traders will be focusing on in the near term in the case of Brent crude is the $40.price level as a breach below that price would increasing the selling pressure by Brent crude bears and negate the formation of a potential reversal pattern.
However, Crude oil bulls could keep the price of Brent above the $40 price level on the basis that the weather condition around the energy hub in the Gulf of Mexico over the past several days has limited upside on diesel shipments in the near term and created some scarcity on diesel supply.
In addition, the Russian energy minister recently disclosed that OPEC+ will continue to track the global oil market on a monthly basis in order to curb overheating and support crude oil prices if the need arises.