On Friday, Brent crude opened at $66.27 per barrel, extending the downturn that originated on September 11, spurred by investor worries regarding a potential global oil surplus. This sentiment was fuelled by the International Energy Agency's (IEA) upward revision of its supply projections, following OPEC+'s plan to boost output by 137,000 barrels per day (bpd) from October and Saudi Arabia's decision to raise exports to China to 1.65 million bpd. The aforementioned moves signal a change in strategy, with producers shifting their focus from price protection to competing for market share.
Additional bearish pressure came from US data showing that commercial oil stocks had risen by 3.9 million barrels, alongside increases in gasoline and distillate reserves. This suggests a possible post-summer decline in demand from the world's largest consumer.
Meanwhile, the price-supporting risks from tensions in the Middle East and Eastern Europe are fading as they have already been factored in by the market. Without bona fide reductions to supply, their effect will be mitigated.
From a technical standpoint, Brent crude on the 4-hour (H4) chart has been consistently falling since September 11. Despite this, signals are now emerging that suggest a likely short-term correction. The Stochastic Oscillator has already moved into the oversold zone, which often precedes a rebound. Nevertheless, it's hard to see a correction happening, at least based on how the volume indicator is acting. The Chaikin Oscillator remains well below zero, confirming the predominance of sellers and a decline in buyer interest, even though there are some signs that the market may be slowing down.
Take into account the following recommendation:
Sell at the current price or during a technical correction at $66.50. Take profit: $64.00. Stop loss: $67.60.
This forecast is valid from September 12 to September 19, 2025.
This content is for informational purposes only and is not intended to be investing advice.
