There was a high volatility in Tuesday's trading session in the oil market. After a strong surge at the beginning of the week the number of those wishing to fix their profits increased, but bulls managed to hold on to their positions, and the trading ended with a slight rise in the range of 0.5%. Technical indicators are already signaling overbought, however, there are no clear signs of a reversal. Brent oil might well reach 87 before the correction.
The fact that yesterday oil prices consolidated at their levels and even managed to continue rising, despite a number of negative news, is especially important. Thus, in the next few days oil transit from Kurdistan through Turkey might be restored, according to the recent temporary agreement. However, the price of black gold is even more pressured by the preliminary statistics on the U.S. labor market in March.
Job openings in the U.S. economy have fallen way more than forecast, by 632,000 instead of expected 163,000. As a result, the number of vacancies has declined below the landmark level of 10 million for the first time since June 2021. Such statistics raise fears of a sooner recession, which might put pressure on oil demand.
However, now demand concerns are almost fully compensated by additional restrictions on oil production by OPEC+ countries. The statistics of the American Petroleum Institute (API) also supports the price growth, the U.S. reserves could fall by 4.3 million barrels last week. If today’s data from the Energy Information Administration (EIA) confirm preliminary API figures, oil might have all chances to continue its rise.
The main target for Brent oil currently is the range of 87–88, above which the price failed to consolidate during the previous waves of growth in the past few months. When these levels are reached, profits should be fixed, as the likelihood of correction is gradually increasing.
The following trading strategy may be offered:
Buy Brent oil in the range of 85–85.5. Take profit – 87. Stop loss – 84.
Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.