Crude and Brent oil prices have been under intense sell-off pressure during the past few days as investors are largely concerned about the rise in delta cases and slowing oil demand in China.
Yesterday, we saw some feeble data out of China and made the sell-off even more intense. At one point, both Crude and Brent oil prices dropped over $3 or in terms of percentage, over 4%. Traders and investors are wondering now that if the sell-off will continue like this.
On the fundamental side, it is important to note that the overall situation with respect to coronavirus is only improving. The reason for that is that more and more places are making vaccination mandatory. This means there will be fewer chances of coronavirus cases increasing in the future. In addition to that, health officials are more equipped with more instruments and experience when it comes to dealing with coronavirus. So a national lockdown due to the recent rise in delta cases seems not plausible. Even according to some reports, we may not even see any local lockdowns as the economic cost is too much, and national officials will like to avoid that. Hence, it is likely that we will continue to see oil demand improving over the next few weeks and months.
From a technical price perspective, there is no doubt that both Brent and crude oil prices are way oversold on the daily time frame as per the RSI. This means that we may begin to see some bargain hunters emerging, which could push the oil prices higher.
When we look at the crude oil price chart on the daily time frame, the price is still trading above the 200-day SMA on the daily time frame which means that bulls are still somewhat in control of the price. The next support is at 62 while the resistance is 72.
