Oil prices ended last week with strong growth of more than 2%. Thus, it was possible to quickly compensate for all the losses incurred in the period from January 30 to February 3. Quotes approached the level of January highs, but their achievement on Monday or Tuesday is unlikely, as in anticipation of the release of important macroeconomic data, the bulls will tend to take profits.
The most important event in the financial markets during the current week will be the publication of statistics on inflation in the US for January. The data will be presented tomorrow, February 14. Price growth is expected to continue to slow down, this time from 6.5% to 6.2%. However, this level is still very high compared to the Fed's inflation target of 2%. Therefore, a further increase in interest rates is likely to be inevitable, which will put pressure on oil prices.
It is also important to pay attention to monthly reports on the oil market from OPEC (Tuesday) and IEA (Wednesday). First of all, market participants will be interested in how the balance of supply and demand will be affected by Friday's decision to reduce oil production in Russia by 500,000 barrels per day starting in March.
The work resumption of the Turkish Ceyhan terminal after a week of inactivity may lead to a decrease in oil prices in addition to fixing last week's profits. There was no significant damage to the oil infrastructure due to the earthquakes, so the supply of 1 million barrels per day is back on track.
Strong growth in oil prices on Friday brought the Stochastic indicator into the overbought zone. A full-fledged sell signal hasn’t yet formed, but the danger of opening long positions at current prices is already visible. The pullback down is required, closer to the levels of 85 and 84, where the rise can resume.
We may offer you the following option of trading strategy:
Sell Brent oil in a range of 85.5 - 86. Take profit 1 – 85. Take profit 2 – 84. Stop loss – 86.5.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.
