The oil price is consolidating after a sharp upward impulse based on the news of additional production cuts by OPEC+ countries. The short-term prospects for oil are getting better, the recession in the global economy is going on the back burner for a while.
Positive forecasts on oil prospects can be seen everywhere now. In fact, this positivity is fundamentally reasonable!
According to Reuters calculations, the total volume of OPEC+ production cuts, taking into account the latest announcement, will reach 3.66 million barrels per day. This equals to about 3.7% of global demand.
Hiroyuki Kikukawa, president of NS Trading of Nissan Securities, believes that demand is expected to rise in the short term due to the summer season for automobiles. At the same time, high oil prices can trigger higher costs for businesses and consumers.
Also, additional demand for energy resources should be expected from India. According to forecasts, the country is expecting record demand for energy in the coming months. Increased demand is also confirmed by government restrictions:
The government notification says that India has extended restrictions on overseas supplies of diesel fuel and gasoline. So, the government is trying to ensure the availability of refined fuel for domestic consumption.
Many analysts are raising oil price targets.
Some world banks have raised their forecast for oil prices to $95-100 per barrel for 2023-2024.
At the same time, some analysts agree that the actual volume of production cuts will be slightly less than the announced 1.65 million barrels per day.
The technical analysis shows that oil closed Monday's trading very strong. The attempt to fix positions by traders after the rise was quickly taken out, which means large demand for oil. Now, volatility on the hourly timeframe has contracted into a triangle. In the nearest future the exit from this pattern on the size of the figure should be expected. On the base of strong fundamentals, the exit upwards is expected.
The size of the figure, which corresponds to the level of $87.0, will be the upside target. Stop-loss can be set on the exit down from the figure at about $84.5.
Growth of Brent crude oil:
Take profit – 87.0
Stop-loss – 84.5
This content is for informational purposes only and is not intended to be investing advice.
