The Brent crude oil price is forming a tight channel within an uptrend.
Oil prices strengthened slightly in the early trading session on Tuesday after yesterday's 2% decline. Strong economic data from China, the world's biggest commodity importer, supported oil demand.
According to the official data, China's economic growth exceeded expectations in the first quarter of 2023. The country's GDP grew by 4.5% during this period. Leon Li, analyst at CMC Markets, says that this data has supported oil prices. In addition, China will soon see the peak of tourist season and demand for fuel should rise even higher.
As estimated by the International Energy Agency (IEA), China will account for the majority of global crude oil demand growth in 2023. However, the recent decision by OPEC+ countries to cut production may tighten the market. A supply shortage is possible in the second half of the year.
A stronger US dollar and rising treasury yields amid a possible Fed rate hike in May are expected to put pressure on commodity markets.
OANDA senior market analyst Edward Moya believes that the oil market may soon become concerned about recession.
China's economic growth and anticipation of higher oil demand during the peak tourist season are likely to benefit the Brent crude oil price.
The oil price formed an uptrend with clear boundaries before the OPEC+ sensational decision.
After the cartel agreed to cut oil production by 1.66 million bpd, the price formed a gap, which has not yet been bridged by a move towards its base. The price could form an alternative trend from the previous channel, where the upward resistance turns into the upward support.
Brent crude oil is showing a pullback from the trend support, providing a buy signal.
A short-term prospect for Brent suggests buying.
The target is at the level of 88.90.
A Take profit could be placed near the level of 86.55.
A Stop-loss is at the level of 83.30.
The bullish trend is short-term, so trading volume should be no more than 2% of the balance.
This content is for informational purposes only and is not intended to be investing advice.