Expectations and assumptions determine the price of Brent oil.
The volume of crude oil deliveries to North Asia in June will be realized by Saudi Aramco company fully. However, some Chinese companies have asked to cut it. According to estimates by two sources, supplies could be reduced by 5 million barrels compared to May.
Saudi Aramco cut its official selling prices for all marks of oil for Asia amid falling refining margins. However, the drop in prices was less than market expectations.
Reduced profits forced companies to look for cheaper oil from other suppliers. China buys more Russian crude at lower prices. At the same time, more and more private refineries are beginning to transship cargoes and buy larger volumes of medium sulfur Urals crude oil.
Total supplies remain unchanged despite a 1.16 million barrels per day cut in OPEC+ crude production starting in May and until the end of the year.
The complete supply volume to North Asia by Saudi Aramco could lead to an increase in the price of Brent crude oil on the basis of maintaining the existing supply volumes. However, a 5 million barrel reduction in supply could lead to a decrease in demand and lower prices in the short term.
On the other hand, the forecast for abnormal heat waves in Asia this summer could affect China, risking power shortages.
A warm summer last year disrupted global supply chains. According to scientists, climate change increases the frequency of extreme weather events.
China Energy News reported that the power supply situation across the country will be tight in the coming months, referring to the State Energy Research Institute. According to the institute, the central, eastern and southwestern provinces probably will experience power shortages during periods of peak demand.
Possible power shortages in China could lead to an increase in demand for Brent crude oil.
The price went out of the downtrend on the H1 timeframe. In terms of wave analysis, the price of Brent oil is in the third ascending wave formation. Breakout of the first wave top at 77.47 will strengthen the movement to selling.
Signal:
The short-term prospects for Brent are to buy.
The target is at the level of 83.50.
Part of the profit should be fixed near the level of 79.75.
The stop-loss is at the level of 74.70.
"Bullish" trend has a card-like character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
