Crude Oil Prices Tumble Amid Raising Concerns Over Libya
Crude oil prices fell around 7% in the last two weeks on Monday on concerns regarding the delayed global economic recovery. Moreover, the troubles related to Libyan supply are causing more headaches for oil bulls.Fundamental analysis: Global economic recovery slower than expected
Investors are increasingly pessimistic that the global economic recovery will accelerate before the end of the year.
“(Coronavirus) infection rates are on the rise again, there are localized lockdowns introduced in a growing number of countries hindering regional economic growth and the number of unemployed is failing to fall significantly,” Tamas Varga, an analyst at PVM Oil Associates Ltd said.
“This leads to dismal oil demand growth,” he adds.
Separately, Libyan commander Khalifa Haftar decided to lift the several months-long halts of oil facilities, a decision that would increase the supply in the market. However, it’s still unclear whether oil fields and ports would resume operations.
“The announcement that the blockade of Libyan oil export terminals may be about to end will add to the woes of OPEC+’s meeting this week,” Jeffrey Halley, senior market analyst at OANDA.
OPEC+, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, scheduled a meeting for September 17 to talk about compliance with deep cuts in production. Analysts believe there will be no further production cuts.
Tropical storm Sally has been gaining momentum in the Gulf of Mexico and is on track to become a category 2 hurricane. This is the second time storms are disrupting oil production.Technical analysis: Price slides lower
Crude oil prices of both brent and crude oil are in the red for a second week in a row. Prices of the latter are down 7% in the last two weeks to trade around the $37 mark. The bulls failed to break above $42, which is a key bull/bear line for oil traders.Crude oil weekly chart (TradingView)
Therefore, this failure is likely to facilitate more selling in the coming weeks. Looking lower, the next support sits at $35 and it is likely to provide enough cover in case the price action slides again. In the long-term, levels around $26 should offer substantial demand.Summary
Prices of crude oil slipped due to the global economic recovery slowdown and worries over the renewed Libyan oil supply. The sellers are now in control and are likely to target $35 next.
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