(Bloomberg) -- Benchmark oil prices fell more than 3% Wednesday, dropping below their 50-day moving averages for the first time in about two months, signaling more selling could be on the horizon in the coming days.
Brent futures dropped to a session low of $79.78 a barrel, slipping below the 50-day moving average for the first time since Sept. 10. West Texas Intermediate tumbled to a low of $77.69, easing below the 50-day moving average for the first time since Sept. 20.
The selloff in oil comes as the Biden Administration is considering a co-ordinated move along with consuming countries to unleash a wave of supply to curb a surge in energy costs and inflation. President Joe Biden and his Chinese counterpart Xi Jinping discussed the merits of releasing oil from their reserves in a virtual summit Monday but didn't make a decision.
The break below the 50-day moving average will likely spur further weakness in the short-term because it will discourage some trend-followers to buy any dips in oil, said Fawad Razaqzada, market analyst at ThinkMarkets.
“In the slightly longer term outlook, it will all depend on the macro backdrop - for as long as there is no major bearish catalysts such as a change in the OPEC+ strategy or the release of oil reserves by the world's largest economies, the downside will be limited,” he said.
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