Oil prices seemed determined to break despite failing on Monday, with a fourth straight day of pressure that puts near-term consolidation levels at risk. The price fell all the way down to $61.94, closing at the low for price over the course of two and a half months. Bearish sentiment has a stranglehold on the market. Speculators are currently eyeing potential stop-loss targets at 60.71. This floor is in line with Fibonacci retracement of 76.4% between $55.40 and $77.88. Moreover, the psychological barrier of $60.00 looms large as a new and higher base first established during the latter half of May.
Fourth, the sentiment in the oil market is still bearish, mainly due to a deepened economic picture for advanced economies. This pessimism further clouds global demand projections, adding more potential headwinds for oil prices. Adding to the gloom is China’s disappointing rate of growth, which has played a large part in the negative demand picture.
On Monday, oil prices returned to the red, despite limited support arising from U.S. threats to India regarding its imports of Russian oil. The analysts think any future oil price upticks will be met with fierce pushback. They expect that prices will find it hard to break above $64.00-$64.50, including a previous Fibonacci extension of 61.8% and the 100-day moving average.
Bears have returned to control the market. Oil traders remain on the lookout for indications that the outlook is improving or sentiment is changing enough to reverse the direction of oil prices. Ongoing accumulation of pressure on these critical support levels puts them at risk of further decline should these alarming trends continue.