What does the short-term outlook for Brent crude tell us? The trend is likely to remain bullish but highly volatile within a week. The physical commodity market is grappling with a severe supply deficit, and there are several factors behind these shortages. Let’s take a closer look.
According to Reuters and Kpler estimates, the number of vessels traversing the key energy route through the Strait of Hormuz—which previously accounted for up to 20% of global oil supplies—has dropped due to persistent missile threats from the Houthis and direct attacks on infrastructure, including a recent strike on a refinery in Riyadh. Significant export constraints have prompted the US Energy Information Administration (EIA) to urgently revise its forecast for the average price of Brent crude in the fourth quarter (Q4) upward to $105 per barrel.
Tropical Storm Isaias, now moving toward the Gulf Coast, is adding further pressure to the supply side. If it grows into a hurricane, platforms accounting for approximately 15% of the country’s oil production could face closures. Mathematical models warn of a potential loss of up to 11.2 million barrels.
The official EIA report recorded a 3.2-million-barrel drop in US commercial crude inventories, bringing the total to 424.1 million—a figure that nearly doubles analysts’ expectations, confirming a supply deficit.
The only restraining factor is the International Energy Agency’s (IEA) statement regarding its readiness to accelerate the release of remaining emergency reserves (approximately 100 million barrels), which has temporarily capped the speculative rally.
Given the fundamental deficit, going long on oil seems to be a smart move.
The overall recommendation is to buy Brent crude from $100 per barrel. Profits should be taken at $130. Stop Loss could be set at $97. There is a chance of making 300 points.
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.
