Brent oil drops below $33 as production freeze optimism fades

February 24, 2016

Brent prices extended losses in Asia to a session low of $32.66/barrel as Iran’s criticism of Saudi-Russia production freeze dampened hopes of a more coordinated action by OPEC and non-OPEC producers. 

Rejected at $35.08

Prices turned lower from $35.08 levels seen in the early US session after Iran called production freeze strategy as ridiculous and added that expecting Iran to follow suit is unrealistic. Furthermore, Saudi said a production cut is unlikely to happen, leaving markets wondering whether a joint OPEC and non-OPEC effort could indeed happen. 

The bearish pressure strengthened further after the American Petroleum Institute (API) figure showed an inventory buildup. Prices currently trade around $32.82/barrel. 

Brent Technical Levels

The immediate resistance is seen at 33.66 (50-DMA), above which the prices could re-test Monday’s high of 34.94. On the other hand, a breakdown of 32.66 (Feb 19 low) would open doors for a slide to 31.79 (Feb 17 low).

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