Brent sell

Oil price drops due to upcoming OPEC+ meeting

31 May 2023 193
Oil price drops due to upcoming OPEC+ meeting

Signals of weak demand and sufficient supply ahead of the upcoming OPEC+ meeting are making oil prices to drop significantly more than they have in four weeks.

Oil fell by about 14% this year as China's slow economic recovery and the tightening of monetary policy by Federal Reserve System affected the prospects for demand. Recently, concerns about the U.S. debt ceiling have intensified bearish sentiment.

An agreement between the two parties for pausing the U.S. national debt ceiling until January 1, 2025, is likely to face a number of difficulties when considered in the Democratic controlled Senate and the Republican controlled House of Representatives. The last ones expressed particular disagreement with the deal.

According to Florida Governor Ron DeSantis, the right-wing candidate for president of the U.S. in 2024, raising the national debt will not change the situation in the economy, which will face bankruptcy. According to government forecasts, interest payments on the national debt will take a greater part of the budget over the coming decades.

OPEC+ plans to meet on the weekend to discuss the production policy in the organization. Market participants expect the maintenance in the current volume of coalition supplies. Fundamental data do not support the need for cuts, but weak macroeconomic conditions could support restrictions, according to Standard Chartered Plc. RBC Capital Markets LLC is also considering the possibility of a "modest reduction".

West Texas Intermediate (WTI) is trading below $70 per barrel. Brent is trading below $74 per barrel. Signs of oversupply are shown in the difference between the contracts for WTI and Brent crude oil.

The price of Brent oil on the H4 timeframe is forming a third descending wave. Breaking through the top of the first wave at 71.60 will strengthen the price movement towards sales.

The price went out of the upward correction corridor. This corridor can be considered as a graphical element of continuation of the main "Flag" direction. The figure has a pole with a downward slope.



The short-term prospects for Brent are to sell

The target is at the level of 70.15.

Part of the profit should be fixed near the level of 71.90.

The stop-loss is at the level of 76.75.

"Bearish" trend has a short-term 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.

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