Oil prices are declining on Tuesday, giving up their gains achieved the day before. Fears of supply shortage, which arose after the announcement of additional production cuts by Saudi Arabia, were offset by other factors.
The Brent and WTI crude oil prices rose on Monday due to the statement made by the representatives of the Kingdom. However by the end of the day the growth slowed down. According to analysts of ANZ, the growth was limited because of continuing concern about the economic situation in the world.
Saudi Arabia has promised to do everything necessary to stabilize the oil market. Concerns about demand prospects, especially from China, had a negative impact on crude prices.
Nevertheless, according to Sean Lim, an analyst at RHB Investment Bank Bhd in Kuala Lumpur, the results of the OPEC meeting will have a minimal impact on the oil market.
Market participants are now waiting to see whether the U.S. Federal Reserve raises interest rates in June or keeps them unchanged. According to the CME FedWatch Tool, there is a 77% chance that the Fed will pause interest rate hikes this month.
The Short-Term Energy Outlook (STEO) from the U.S. Energy Information Agency (EIA) is expected today at 16:00 GMT. The report includes supply, consumption, trade and price forecasts for major fuels. It also includes in-depth analysis of natural gas, crude oil and refined products markets. If the EIA forecast indicates a change in energy supply or demand, it may affect the price of Brent crude oil.
China's retail sales figures for May will be released on Wednesday. It will show the level of demand for fuel in the country which is the second biggest consumer in the world.
Brent price is forming a corrective channel with a range of 71.50–78.51 on the H4 timeframe. The price pulled back from the upper boundary, signaling the price movement to the support level of the channel.
Signal:
The short-term outlook for Brent is to sell.
The target is at the level of 72.05.
Part of the profit should be fixed near the level of 74.25.
A stop-loss should be placed at the level of 78.70.
The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
