Oil prices have kept sliding this week. Brent quotes slumped from $68.7/bbl hit lately to some $66.53/bbl.
This decline is a clear sign for the profit-taking after the leap, but it also does not offset possible further upturn. The weakening is said to be caused by strong resistance faced at $68.6 that was observed in November 2018.
At the same time, another reason for the downturn is said to be behind the economic reports from the USA and the EU. Specifically, the former posted weaker performance in the industrial sector, while the latter showed lower PMI. These results are considered by the investors as one of the signs that the global economy is slowing down, which in its turn may affect demand for oil. An additional impact is coming for weaker global indices as well as a stronger US dollar index.
The market is also concerned about the inversion of the US state-bond yield. Specifically, it can be seen now that the yield of 3-month state bonds at 2.453% exceeds that of 10Y ones at 2.446%. At the same time, the situation when demand for long-term state bonds gets lower, while buying of short-term treasuries rises is considered as a sign of upcoming recession. All these factors definitely affect commodities and stock markets.
Nevertheless, the market expert noted that quotes are mostly at balanced levels having offset the downturn factors after the recent plunge.
Speaking about the active rig count, the number of active rigs in the USA decreased by 9 units, which can lead to lower production. As a result, prices can stay within $66-67/bbl at least today.
However, the current decline is quite obvious and can continue driven by the risks around unpredictable Brexit and US-China talks. Oil can get strong support at $64. Meanwhile, the reduction of oil production by the OPEC members, measures against Iran and Venezuela as well as an upcoming automotive season can boost upward trend and bulls can attempt to break the line of $69/bbl.