Oil buyers try to seize the initiative

Brent oil quotations fell short to close the gap at $80 per barrel. After overcoming 80.5 bears met strong resistance from buyers, and as a result, now we witness attempts to return prices to the level of the first half of April. The unclosed gap reinforces the risk for long positions, but once the gap rises above 84, the bearish scenario wouldn’t prevail.

At the beginning of the last week of April, market participants paid attention to the long public holidays in China, which start on Saturday. This period, which is called the Golden Week, is characterized by an increase in tourist activity and fuel consumption. According to CCTV, the number of passenger trips during the holidays in China could reach 9 million. During the same period in 2019, about 6.9 million trips were made.

Fenglei Shi, specialist at S&P Global, reports that domestic demand for jet fuel in China could fully recover during the Golden Week. Meanwhile, demand from international air carriers could recover to nearly 70% of pre-pandemic levels, leaving plenty of room for future growth in petrochemicals consumption.

About 170 million Chinese traveled abroad each year before 2019. That number dropped to 9 million during the pandemic. According to JPMorgan Chase & Co, the removal of anti-COVID restrictions and the subsequent recovery of air transportation will be key driver of growth for global oil demand growth this year. Macquarie expects China's jet fuel consumption to grow by 430,000 bpd in 2023. That's more than 30% of the International Energy Agency's (IEA) projected increase in global fuel demand.

Bulls need to raise the price of Brent above 84 to fully return the initiative in the oil market to their hands. In this case, the way to the local highs of April near 87.5 will be opened.

We may offer you the following option of trading strategy: 

Buy Brent oil in the range of 82-82.5. Take profit — 84. Stop-loss — 80.8.

Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.