Oil continues to remain in a flat range. In recent trading days, the price has approached the lower boundary of the rectangle. Signals of a possible tightening in the monetary policy by the U.S. Federal Reserve System (Fed) are affecting oil prices.
Paradoxically, the weakness in oil prices is caused by strong economic data in the United States.
The number of housing purchases rose to a record high in more than a year, durable goods orders exceeded forecasts, and consumer confidence reached its highest level since early 2022. At the same time, real estate prices in the U.S. rose for the third month in a row.
This kind of data does not deny the possibility of a recession next year. However, the risks have decreased significantly. The latest reports on retail sales, labor market and inflation-adjusted consumer expenditures confirm this.
The strength of the U.S. economy suggests that there is room for the Fed to tighten monetary policy further.
A sign of weak demand for oil is the large number of idling off tankers.
According to data from June 23, the volume of crude oil sitting in stationary tankers jumped to the highest level in more than two and a half years.
By the end of last week, oil reserves in floating reservoirs had reached about 129 million barrels. On Monday, Vortexa data showed that this is the highest value since October 2020. However, while this indicator was growing, there was also a decrease in the volume of transported crude and total global reserves of oil.
One of the reasons for the increase in the amount of fuel in floating storages was the crowding by ships with Saudi oil near the Egyptian coast of the Red Sea.
According to technical analysis, the price of oil continues to trade in a wide flat. The lower boundary was tested today. It is worth to mention that the last three tests of the lower boundary were displayed at least in two daily candlesticks. Today's buyback is intraday, which is not typical for quotes. A new decrease to the lower boundary is allowed.
The local low at $71.5 will be the downside target. Stop-loss can be set at a move above 0.236 Fibonacci inside this rectangle. This level corresponds to the price of $73.5.
Decline of Brent crude oil:
Take profit – 71.5
Stop-loss – 73.5
This content is for informational purposes only and is not intended to be investing advice.
