Brent Crude oil on the verge of crucial support. Will it break or not?

Brent crude oil on the verge of crucial support. WIll it break or not?

Brent Oil prices dropped more than two per cent yesterday. The price plunged below its lowest levels since 5 May 2023 after data showed an unexpected, large build in U.S. crude stocks last week. Fears of an oversupply have been sparked by it, as well as indications of weakened Chinese demand.

Yesterday, Brent crude futures for August delivery dropped by 2.29% to $72.09 a barrel. Whereas, U.S. West Texas Intermediate crude (WTI) eased 2.29% to $67.55 a barrel on a closing basis.

However, since morning prices were able to recover slightly. Now trading at $73.09, up 1.39%.

Now, today Weekly Inventory Data will be released. Which will have a strong impact on the oil prices.

Further, Non-Farm payroll Data and OPEC+ meetings also lined up to give clutter to the oil prices.

For any hints on monetary policy, the primary focus is now on the nonfarm payrolls figures for May, which are coming this Friday. Through May, crude prices had been impacted by worries about longer-term increases in U.S. interest rates.

In anticipation of a meeting between OPEC members this weekend, the crude markets were on edge due to uncertainty about further output curbs by the group. Ministers from Saudi Arabia and Russia had presented opposing perspectives on upcoming production reduction.

Brent Crude oil prices have stalled their recent bearish momentum. That started on 25 May 2023. Prices dropped significantly from $78.34, and yesterday made a low of $71.54. Now it’s trading at $73.01, up 1.29%.

On the above chart, a bullish harami candlestick pattern was noted which is an indication of a temporary pullback in the near future. And it may recover towards resistance $73.50-$74.20.

Furthermore, RSI 14 and it’s 9 SMA are also trading at an oversold zone, which might support a temporary recovery.

On the downside, $71.35 will be a decisive break, below its recent fall to continue. And prices witnessed a new crunch towards $67.50-$65.00.

Looking at the other factors, Fed rate hike fears and a sharp decline in China’s factory activity are yet favouring a bearish outlook. But, the OPEC meeting decision also stands for the given direction.

Hence, Brent crude oil may consolidate above the crucial support of $71.35 and below its immediate resistance of $74.40 before the next big move. And prices will expect to fluctuate according to the snake headlines.