Crude Oil Prices in a Range-Bound Market

The world’s second-largest economy had in recent times been the most critical pillars in the ongoing recovery in the present fragile energy markets, especially as the largest consumer of oil (United States) is still battling it out on stopping the negative demand status quo induced from the rising COVID-19 caseloads.

Despite a recent impressive data report coming from China’s manufacturing sector, the second-largest economy imports for this month are expected to drop for the first time in five months as Chinese oil buyers struggle to keep their stockpiles.

This macro stated above, gave Brent Crude bulls little or no gas in breaching the important resistance at $46.50 as risks now move to the downside this week (although we are still in a range-bound market).

A break below $45 price level would likely give crude oil bears enough strength, to increase pressure on the downside targeting the $40-$42.50 support area. Brent Crude oil pulling back recently from the $46 price level is obviously negative for crude oil this week, thereby increasing the odds that crude oil prices might finish this week lower, as the prevailing macros seem not to support the black liquid hydrocarbon.

Although China seems eager to buy crude oil at present price levels, the second-largest economy have no place to store them. As a result of these most crude oil traders expect Saudi Aramco to curb its oil production on the Asian grade type.

As always, the focus for many crude oil traders and major energy stakeholders remain on the near-term growth of the global economy and the supply/demand re-balancing of crude oil prices.

Risks in the short term remain skewed to the downward trend; as rising supply from major oil producers and the recent rise in COVID-19 caseloads, continue to cap the bullish run on crude oil prices.