Crude prices have fallen below or hover around $50/bbl as Saudi Arabia has reduced prices selectively for some regions but the commodity now looks technically ripe for a rebound.
Brent crude for spot delivery dropped to $52.53 on Monday, a new multi-year low, from the previous close of $55.70. West Texas Intermediate crude had fallen more than 5%, below the $50 levels.
The market is now waiting for the US oil inventories data due on Wednesday. According to a Bloomberg survey, oil stocks of the world's largest consumer may have risen by 750,000 barrels in the second week of January.
Analysts say US crude output has risen to a 30-year high, which is adding to the global oil glut that has pushed prices down more than 50% over the past six months. Opec's decision to keep its output unchanged further weakened the commodity.
Saudi Arabia's state-owned oil producer Saudi Aramco had raised prices for its crude varieties sold to Asian markets but slashed the rates for European and US markets. The move is assumed to be part of the country's efforts to increase its market share in the West without much impact on its total revenues.
Oil now sees no fundamental support but charts do suggest a rebound given a long-term uptrend dating back to 1998.
If that trend is considered, the commodity has little technical room below $50 and therefore it is ripe for a bounce back similar to the late 2008 move.
The levels to watch on the way higher are $67 and $80 ahead of $100. In case of a downside break of the channel support, then $41.5 and $33.70 will be in focus.