Oil approaches January highs

07 March 2023 340
Oil approaches January highs

Brent oil prices continued to rise this week, coming close to the February highs just below the 87 mark. If they manage to gain a foothold at this level, it opens the way to the highs of December and January in the 88-89 range. Importantly, yesterday's closing price was above its 100-day moving average for the first time since early November. If it manages not to lose the gains of the past 2 weeks in the coming days, the situation for “the bulls” in the oil market is going to be much better.

There was a huge oil sell-off yesterday after the publication of the Chinese GDP outlook for the current year. The economic growth target of 5% turned out to be much lower than market participants' expectations, however by the evening all the oil drawdown was bought back.


In fact, even 5% GDP growth in the world's second-largest economy would be a good support for energy demand. Refinitiv estimates that China already imported 11.85 million bpd of oil in February, up from 10.98 million bpd in January. It’s the largest volume of Chinese oil imports since July 2020.


Seeing growing demand from China, Saudi Arabia raised most of its official crude oil prices for Asia and Europe with the supply in April. This is the second consecutive price increase. According to Amin Nasser, a chief executive officer in Saudi Aramco, demand in China is strong at the moment. Other Middle Eastern countries usually follow the same path as Saudi Arabia in raising prices.


The next growth target for the Brent oil is 88 and the following upward movement might push the prices to the round level of 90. The 100-day moving average, which is now close to 85.9, might become the support level.


The following trading strategy can be suggested:


Buy Brent oil at the current price. Take profit — 88. Stop loss — 85.9.

Also traders can use Trailing stop instead of fixed Stop loss at their discretion

This content is for informational purposes only and is not intended to be investing advice.

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