Brent Crude Oil suffered a brutal 9% selloff last week, collapsing below the psychologically important $71 level, as a combination of geopolitical and fundamental shocks roiled global energy markets.
The dramatic breakdown came after Donald Trump announced sweeping tariffs, which stoked fears of a global recession or even depression — a scenario that would significantly reduce global oil demand.
To make matters worse, OPEC and its allies delivered a surprise punch to the bulls: an unexpected announcement to increase output by 411,000 barrels per day in May. Major producers including Saudi Arabia, Russia, Iraq, and Kuwait joined forces to accelerate the unwinding of previous production cuts, just as markets were bracing for weaker demand. The result? Panic selling across energy assets.
Technical Picture: Downtrend Accelerates
The weekly chart paints a textbook bearish setup:
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Price is firmly trending within a downward-sloping red channel, and the latest rejection at the upper boundary only reinforced the pattern.
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Last week’s break below $71, a key horizontal support level, has now opened the door to a possible test of $64, the next support — and even $50 – $54, the base of the broader downtrend zone.
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The 21 and 34-week EMAs are both sloping down, a clear sign of sustained bearish momentum.
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The MACD is below the zero line, reinforcing the bear market structure. There’s no bullish crossover in sight.
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The RSI is at 34.69, heading toward oversold territory, but not quite there yet — suggesting more room for downside before dip buyers step in.
Bearish Scenario: Deeper Correction Ahead
If selling pressure continues and Brent breaks below $64, the next major level to watch is $54. This scenario is supported by:
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Worsening global demand outlook due to protectionist trade policies.
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Increased OPEC supply hitting the market during a potential macroeconomic downturn.
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No clear bullish divergence on RSI or MACD.
Traders may continue to unload long positions, with any rallies likely to be sold into unless macro sentiment dramatically improves.
Bullish Scenario: Oversold Bounce from Support
Despite the gloom, oil markets are known for sharp countertrend moves. If price finds support, we could see:
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A technical relief rally back toward $71, the previous support-turned-resistance.
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Oversold RSI levels potentially triggering short-covering and bargain buying.
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A potential stabilization if OPEC walks back on its production hike or if macro fears cool down.
For bulls to regain control, Brent would need to break back above $77 — the upper boundary of the current range — and ideally reclaim the EMAs to suggest trend reversal.
Conclusion
The fundamentals have turned sharply bearish, and the technicals confirm that Brent remains locked in a downtrend. The combination of recession fears, collapsing demand projections, and a surprise OPEC supply boost has sent shockwaves through the market.
The next few weeks will be crucial. Stay alert — oil is now a barometer not just for energy, but for the health of the global economy.
