Oil prices continue falling with technical gap likely to be filled

Crude oil futures prices had continuous drop on Thursday with a step closer to a major technological gap.

The West Texas Intermediate (WTI) for May delivery lost 1.87 U.S. dollars, or 2.36 percent, to settle at 77.29 U.S. dollars a barrel on the New York Mercantile Exchange. Brent crude for June delivery fell 2.02 U.S. dollars, or 2.43 percent, to settle at 81.10 U.S. dollars a barrel on the London ICE Futures Exchange.

At the heart of the market's newfound malaise are expectations of growth-sapping interest rate rises on both sides of the Atlantic, said a research note by PVM Oil Associates on Thursday.

It noted that both WTI and Brent crude oil futures prices now in a full-blown correction gave up all their gains from the latest production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its partners.

"As things stand, the oil market is caught in a negative thought loop with bears in the driving seat," said PVM Oil Associates.

Pakistan has started to purchase discounted crude oil from Russia, said a report by Reuters on Thursday quoting a high-rank official from Pakistan.

It looks like the oil market is "finally trying to fill a gap" as the global economy is slowing down and demand is going to fall through the floor, said Christopher Lewis, analyst with market information platform FX Empire.

The question now is whether or not the gap gets filled and the WTI oil price bounces, or if the market slices through the technical gap of around 75.50 U.S. dollars per barrel, according to Lewis.

"Downside for oil prices should be limited to the gap made from the OPEC+ production cut announcement earlier this month," said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.

Despite the short-term risks for crude prices, oil should still find a home north of the level of 80 U.S. dollars per barrel, according to Moya.

Both the WTI for May delivery and Brent crude oil futures for June delivery jumped over 6 percent on April 3 following the announcement of production cuts by the OPEC and its partners, which left a big technical gap beneath.