Oil prices move to next growth target

19 May 2023 229
Oil prices move to next growth target

Brent oil prices broke through the downtrend line and returned to the area of last week's highs, as the previous forecast had indicated. The growth target of 76.5 was successfully achieved, but the quotations didn’t reach 77.5 before the correctional pullback started. Buyers might be less active on the last working day of the week, and 77.5 might be reached after the weekend. 

Despite lingering concerns of a recession in the global economy, the approach of summer is traditionally positive for fuel demand. Both U.S. and Chinese refineries ramp up production, increasing crude consumption. Meanwhile, U.S. gasoline and diesel inventories decrease and are well below the five-year average for this time of year. This shows the stable demand and supports crude oil prices.

In April, Chinese refiners, in turn, were forced to take advantage of crude stocks for the first time in 18 months. This is due to high rates of refining, exceeding the available volumes of both imported and domestically produced oil. China's refineries seek to take advantage of the growing domestic demand for fuel as the country's economy recovers from the removal of anti-COVID restrictions.

China was refining 14.87 million barrels per day in April. That's the second-highest total in history after the March high of 14.9 million barrels. Last month, the total amount of available oil was 340,000 bpd below refineries' needs. As a result, refiners used the crude reserves for the first time since November 2021.

Now the daily chart of Brent might show a new trend — an uptrend. The trend line might be good support for a renewed rally of the oil price in case of a correction to 75. 77.5 is still a relevant target at the top.   

We may offer you the following option of trading strategy: 

Buy Brent in the range of 76 – 76.5. Take profit — 77.5. Stop-loss — 75.

This content is for informational purposes only and is not intended to be investing advice.

New Popular
Commenting rules