The Federal Reserve’s (Fed) rate cut at its December meeting and rapidly spreading talks about further monetary easing have provided short-term support for oil prices because of a weaker US dollar. But it’s here today, gone tomorrow, as markets keep a close eye on fundamental headwinds, the key one being a supply-demand imbalance.
The burgeoning glut issue continues to cast gloom among investors. Recent reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) point to persistent supply growth and a potential slowdown in consumption levels, thereby putting crude prices under significant pressure. Despite the alliance’s positive long-term outlook on demand, traders have been actively selling Brent futures. Major players like Trafigura remain bearish, anticipating another wave of output increases. Sellers have fully seized control, with open interest data strongly suggesting a near-term decline in prices.
Brent crude is now hovering near the lower boundary of its recent trading channel, stuck in the $61–$62 range due to constant pressure.
However, ignoring all headwinds, two obvious technical targets are flickering before investors’ eyes: $64.1 and $62.8. Such targets have not been witnessed below current levels. Therefore, oil prices are likely to climb, at the very least, to the $62.8 threshold.
The overall recommendation is to buy Brent crude, with Take Profit at $62.8 and Stop Loss at $60.8.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
