Brent continues to attract sellers on bullish attempts and could suffer deeper losses
Oil prices struggle for direction on Tuesday after another failed bullish attempts seen at the start of the week. Brent crude was once again rejected from the $43.50 local resistance and finished in red. Today, the futures have settled around the 100-daily moving average, staying below $43 ahead of fresh industry news.
Later today, the American Petroleum Institute weekly report could support the market if the figures reveal a contraction in the US crude oil and gasoline inventories. On the negative side, yesterday’s OPEC+ meeting disappointed traders as the alliance failed to offer any hints on further oil output cuts despite the participants reinforced its commitment to support the oil market amid the worsening demand prospects.
Also, traders are nervously awaiting updates on the US stimulus talks that will be also closely eyed for the sentiment in the global financial markets in general. According to some reports, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin made progress in stimulus negotiations a day ahead of a soft deadline. Still, it’s not enough to attract buyers as market participants want to see the actual package that would ease the process of economic recovery amid the pandemic.
By the way, the global tally of coronavirus cases topped 40 million on Monday, with outbreaks bubbling up across the U.S. and Europe, threatening global energy demand recovery and capping the bullish potential in the oil market.
Against this backdrop, Brent continues to attract sellers on bullish attempts and could suffer deeper losses if the US officials fail to strike a deal on stimulus measures before the November 3 election. In other words, so far, the path of least resistance for the market is to the downside.
From the technical point of view, Brent crude needs to make a decisive break above the $43.55 area in order to see a more sustainable recovery. However, it looks like there is no enough upside momentum at this stage, so this level will likely continue to act as resistance so far. On the downside, the immediate support arrives at $42.50.