Yesterday, Brent quotes tried to continue their growth, but they faced buyers’ resistance above 85. As a result, the trading finished the day at the same points where it started. A daily candlestick looks like a doji on the chart — a signal for trend reversal. Doji doesn't have a decisive influence on price dynamics by itself, but considering other factors, it can be argued that oil has the potential to end the current week with some decline.
Currently, the state of two major economies, American and Chinese ones, is the main driver for the price growth of all commodities, including oil. If the data on China looks quite positive and causes expectations of an increase in energy consumption, then the reaction to U.S. good statistics is the opposite. The better the American economy is, the more reasons the Fed has to increase interest rates again, which puts pressure on oil quotes and all dollar-denominated goods.
The number of weekly jobless claims in the U.S. fell for the 3rd week in a row, approaching the January lows. This is a wake-up call about the remaining problems in the labor market, but we will see the complete picture next week when the full report for February will be published.
Meanwhile, demand for gasoline in the U.S. is declining, and it may develop into a long-term trend. Gasoline consumption peaked from 2017 to 2019, and demand was significantly affected by the pandemic in 2020-2021. Demand decreased by another 0.5% in 2022 and continues to decline in early 2023. The decline in gasoline consumption is related to the development of remote work and the growth in sales of electric cars. U.S. gasoline consumption is projected to go through annual nearly 1% decline for the next few years.
The next target of correction for Brent is 83.9.
We may offer you the following option of trading strategy:
Sell Brent in the range of 84.5 - 85. Take profit — 83.9. Stop-loss — 85.5.
This content is for informational purposes only and is not intended to be investing advice.
