Brent may find support near the uptrend line

10 March 2023 266
Brent may find support near the uptrend line

Brent crude prices lost most of its gains of the previous 2 weeks within three days. The price appeared to be at the uptrend line near December’s lows, which have already acted as a great support. This time, the buyers are likely to intensify their efforts and try to prevent the trend breakdown from being confirmed, otherwise the outlook for oil will deteriorate. 

 

Traders in the oil market remain cautious after Fed Chairman Jerome Powell's comments on further monetary tightening, as inflation persists. Strong labor market data for February may also contribute to the regulator's hawkish stance. 

 

Meanwhile, the number of unemployed Americans last week rose to its highest level since early January, surpassing 200,000. Now there are mixed readings on data like that. On the one hand, more people unemployed might signal that the economy is going to experience demand issues in the near term, and that's a negative sentiment for oil prices. But it could also deter the Fed from pushing rates higher, and this would be positive for all commodities.

 

But despite demand worries in the U.S., Asian countries are likely to support prices for "black gold". In February, for instance, fuel demand in India jumped to its 24-year high. Oil consumption increased by more than 5% to 4.82 million barrels per day. Demand is projected to grow further in March to the level of 5.17 million bpd. China, in turn, has been reducing its petroleum exports due to increased domestic demand, thus providing support for oil prices.

 

Since Brent has not fallen below the level of previous local lows (80.3), odds for a rebound upwards are still good. The growth target may be the level of 82.5.



The following trading strategy can be suggested:

 

Buy Brent in the 80.7-81.4 range. Take profit – 82.5. Stop loss – 80.3.

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

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