Brent declines amid growing inventories and potential production increases

Brent crude opened at $67.66 per barrel on Friday. Concerns about a potential oil oversupply, combined with geopolitical unrest related to the United States' efforts to mediate tensions in Eastern Europe, have been the key drivers behind the recent price dynamics.

The end of the summer peak demand season in the US and planned production increases by OPEC+ countries are mounting pressure on the market and fueling investor anxiety. The International Energy Agency (IEA) forecasts a record global crude glut next year, building up strong bearish momentum.

At the same time, geopolitical risks are preventing a steeper decline in Brent prices. Ongoing tensions in Eastern Europe, which are disrupting energy production, threaten steady supply chains. The US announcement regarding tighter restrictions and the implementation of 50% tariffs on Indian imports aims to limit Russian oil purchases but also jeopardizes global supply stability.

These factors are partially priced into the market, meaning new bearish catalysts, such as rising US crude inventories or geopolitical tensions easing, could accelerate Brent’s decline to $65.50.

Technical analysis supports the near-term bearish outlook. The price has already established a slight downtrend on the daily chart. The Stochastic Oscillator is located in the 40–48 range, suggesting a neutral state, neither overbought nor oversold. However, the %K line remains below the %D one—a clear bearish signal that emerged during the recent price advance. This may also suggest a bearish divergence, often a precursor to further downside.

Consider the following trading strategy:

Sell Brent at the current price. Take profit: $65.50. Stop loss: $69.00.

This forecast remains valid from August 29 to September 5, 2025.