Crude oil price extended previous losses to a two-month low as concerns over a supply glut and slowing demand growth continue to weigh on the market. Brent oil edged lower to find support at the crucial support level of $60 as at the time of writing. At the same time, WTI oil price declined to its lowest level since 21st October at $56.41. With the highly anticipated US nonfarm payrolls and CPI data, the high volatility in the US dollar is set to spread to the dollar-priced crude oil. 

How low can crude oil prices reach?

Crude oil prices remain under selling pressure as oversupply concerns and a weak demand outlook are set to continue defining the market sentiment into the coming year. Indeed, the possible rebound is expected to be corrective in nature as opposed to the onset of a trend reversal.

Nonetheless, certain elements are clouding this bearish outlook. To start with, China has been hoarding robust oil stockpiles; a trend expected to continue in 2026. According to Citigroup, the stockpiling is set to increase in pace from an average of 800,000 bpd to 900,000 next year. 

While that rate will help cushion the global oil market from the forecasted supply glut, it does not necessarily equate to a boost in demand growth. In fact, demand growth in the leading importer and consumer of crude oil is expected to remain sluggish till mid-2026 at 150,000 bpd. 

Read more: China’s economic slowdown deepens in November as weak demand weigh on growth

Besides, the International Energy Agency (IEA) has improved its supply/demand outlook for 2026. In its latest monthly report, the agency now expects supply to surpass demand by 3.89 million bpd in 2026 compared to its previous forecast of 4.09 million bpd. At the same time, it has improved its demand growth outlook, citing subdued tariff woes and a brighter global economic outlook. 

As the crude oil market ponders on these drivers, they are also keen on the US nonfarm payrolls and CPI data slated for release on Tuesday and Thursday respectively. As investors look for cues on the Fed’s next move, heightened volatility in the Treasury yields and the US dollar is set to spread to the dollar-priced crude oil.

Brent crude oil price technical analysis

Crude oll price chart | Source: TradingView

The benchmark for global oil prices, Brent, edged lower on Monday; extending losses recorded in the past week. At the time of writing, it was trading at $60.44 a barrel; a level last seen in late October. This has pushed it closer to the oversold territory at an RSI of 36. Besides, it is at the border of the bearish channel that has largely shaped its movements since early August. 

Based on these technical indicators, a correction is likely in the immediate term. This would have the Brent crude oil price bounce off the crucial support zone of $60 and back to the tight range of between $61 and $64. 

However, even with the expected rebound, I expect the asset to remain below $64.50 in the short term. Indeed, a move above that level will invalidate this thesis. On the flip side, a move below the highlighted bearish channel will give the sellers a chance to retest May’s lows.  

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