Oil prices are falling after two weeks of gains. Nevertheless, the prices have almost reached the highest level since mid-November.
China's renunciation of the zero-COVID policy has strengthened expectations related to the growth of oil consumption in the country. More people were able to return to their hometowns to celebrate the Lunar New Year after the restrictions were lifted. Industrial activity is likely to pick up after the holiday week. Oil has been further supported by a weaker dollar amid investor confidence that the Fed is about to end its rate hike cycle.
However, the Fed and ECB’s officials continue to assert commitment to their policies, so it's premature to talk about a reversal. Once investors understand the gravity of central bankers, oil prices are likely to rebound. But so far, investors are optimistic about oil demand.
Oil is also being backed by a cap on petroleum products from Russia. Therefore, U.S. Treasury Secretary Janet Yellen stated that price caps on oil from Russia could be extended to petroleum products, admitting that this task is going to be more complicated.
"We have studied the market, and we believe in accomplishing the same goals we did with oil," Yellen said. But there is always a chance, she mentioned, that things could go wrong.
The G7 countries negotiated that a similar plan would be implemented for petroleum products from Russia concurrently with the introduction of the EU import ban on February 5.
There is enough room for oil to grow, according to the technical analysis. This can be seen by the RSI indicator tracked on the daily timeframe, which is still far from its overbought levels.
Crude oil failed to hit the first Fibonacci level of 0.236 out of the entire retracement wave. This is the first target for a rebound after a protracted correction in oil prices. Besides, the upside target could be on the trend line, providing resistance to accelerate the growing momentum of the commodity. So, the growth target for oil is the level of $89.00. Stop-loss is placed on the lower boundary of the candle's body on Friday, i.e., the level of $86.11.
Brent oil is likely to rise:
Take profit - $89.00
Stop-loss - $86.11
This content is for informational purposes only and is not intended to be investing advice.
