Daily Market Analysis and Forex News
BRN to move closer to $100/bbl?
Brent oil appears to have seen a technical pullback recently, with the 14-day relative strength index (RSI) having pulled back below the 70 threshold which denotes “overbought” conditions.
Now that some of the froth has been cleared after its stunning rally over the past 3 months, this may set a stronger platform for oil bulls to chase after the $100/bbl handle.
Russia and Saudi Arabia’s decisions to extend its production cuts until the end of 2023 are still the key drivers behind the recent oil prices’ rally.
A higher-than-expected drop in the US crude inventories (-2.2M vs -1.3M expected) reported last Wednesday, has provided a strong lift for the BRN bulls to briefly reach above the $95/bbl.
On the global stage, OPEC expects a deficit of 3 million bbl/day in Q4, which creates a supportive environment for oil bulls to chase higher highs over the near-term.
While the current demand for oil is proving to be resilient, one more potential interest rate hike in the US and China’s murky economic situation may have an adverse impact in the foreseeable future.
BRN may consolidate while waiting for macro clues.
Looking solely at the charts, the $95/bbl round number is proving to be a strong resistance level, while on the downside the psychologically important $90/bbl might provide support.
BRN may consolidate at $92-$94/bbl as investors await for more macro-economic hints.