Crude oil prices fell over 1% on Thursday and continue to correct lower ahead of the weekend. Brent crude is challenging the psychological support of $78, trading at nine-day lows just above $77. After the price derailed the $78 level, the short-term technical outlook has worsened further.
The latest sell-off came amid concerns that OPEC may wind down output cuts amid expectations over reducing supplies from Iran and Venezuela as a result of tight US sanctions. Russia and Saudi Arabia have already signaled that this issue will be discussed at the upcoming June summit in Vienna. Amid these speculations, supply concerns that sent the prices to 3.5-year highs recently, may ease as well.
Against this backdrop, Brent could continue its bearish correction down the road, especially in case of further signals about the upcoming lifting the OPEC output. The continued rise in US shale drilling and production activity may add to the downside pressure. Besides, profit taking looks attractive at current levels. As such, oil will likely lose the $77 figure in the short term, with the immediate bearish target is now at $76,50.