Brent crude oil drops as quarterly losses continue since 2020 pandemic disruption

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Brent crude oil drops 1.54% today

Highlights

Brent crude is set for its biggest quarterly drop since 2020, reflecting a significant loss of recovery momentum in the oil market.
Muted price reaction to recent geopolitical tensions indicates traders are reluctant to price in higher demand or a substantial risk premium.
Technical indicators confirm entrenched bearish momentum, with Brent crude likely to hold between $71.21 and $73.33 over the next few days barring a breakout.

Biggest quarterly drop since 2020 as market risk premium fades

Brent crude oil is on track for its largest quarterly loss since 2020, when demand was disrupted by the Covid-19 pandemic, according to Theguardian. This sustained quarterly decline highlights persistent supply and demand imbalances and suggests that market recovery momentum has faded. Additionally, the limited price movement since the recent conflict began signals that traders are not pricing in a significant risk premium, pointing to ongoing caution on the demand side.

Persistent bearish signals as XBR stays below major resistance

On the hourly chart, XBR remains below the MA-20 at $73.05 and MA-50 at $73.43, while on the daily timeframe, it continues to trade beneath the MA-200 at $80.98. The Ichimoku Kijun line at $73.25 serves as immediate resistance. Bearish signals are confirmed by the Moving Average Convergence Divergence (MACD) and Awesome Oscillator, both of which remain negative. The Commodity Channel Index (CCI) and Bull/Bear Power indicate oversold conditions, supporting seller dominance on an intraday basis, while the Relative Strength Index (RSI) sits in sell territory at 36.25. Both the Average Directional Index (ADX) and Stochastic RSI are neutral, implying a lack of strong directional momentum.

Rangebound outlook persists as downside risk outweighs rebound

Over the next two to three trading days, Brent crude oil is expected to move within a typical volatility band between $71.21 and $73.33. The probability of an upside breakout is very low, with downward continuation favored unless there is a clear move above immediate resistance near $73.25. Baseline expectations call for rangebound trading within these levels, while a break below support at $71.21 would set the stage for additional declines.

Anton Kharitonov, expert at Traders Union, views the current Brent crude oil setup as distinctly bearish. He notes the ongoing failure to reclaim key moving averages and the record-setting quarterly decline since 2020 as strong signals of lost momentum. Traders appear skeptical, with little risk premium visible after recent geopolitical developments. "Base case remains more downside, and unless $73.25 is recovered, I see no reason to look for a reversal."

Earlier, analysts noted that oil prices declined as physical supply through the Strait of Hormuz improved, with traders downplaying geopolitical risk in favor of tangible supply recovery. With Brent crude now showing sustained weakness and limited volatility despite ongoing uncertainties, traders should monitor the $71.21 support level closely, as a decisive break below it would likely accelerate additional downside momentum.

Source of Data: XBR Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.