The oil price has managed to reach the upper boundary of the $72–78 rectangle. However, it has not been able to consolidate above it yet. Such a movement requires a new powerful growth driver, which has not been seen yet. At the moment, investors continue to be concerned about the upcoming recession.
The pressure on the oil price may be exerted by reports of record oil production in China, as well as potential production growth from OPEC+ members, which previously were physically unable to meet the alliance's quotas.
By November 2023, Nigeria, which is the largest oil producer in the African region, plans to increase production of the said fuel to 1.7 million barrels per day (bpd).
Earlier this year, Nigeria's quota in OPEC+ was 1.742 million bpd. However, due to insufficient production inside the country, it was decided to reduce the limit to 1.38 million barrels per day.
At the moment, the declared plan of fuel production by Nigeria for the next year is 1.578 million barrels per day. If this level is confirmed by OPEC+, the said figure will be considered as the country's production target.
The demand for oil is declining due to the receding hot weather. According to experts, consumption is not expected to decline in the coming months, but it will not grow either.
India's fuel demand eased 3.7% in June month-on-month, government data showed on Friday. Analysts believe this is due to the start of the monsoon season in the country.
Consumption of fuel, a proxy for oil demand, totalled 19.31 million tonnes in June, down from 20.06 million tonnes in May. Sales of diesel decreased about 3.7% in June to 7.91 million tonnes from a month earlier. The data was provided by India's oil ministry.
According to technical analysis, the oil price is currently at the upper boundary of a wide rectangle. This pattern has been present for more than two months.
The 0.236 Fibonacci level of the whole growth wave, which matches the price of $77.1, will be the downside target. A stop-loss could be placed when the price exits the pattern and updates the highs at the level of $78.8.
A decline in the Brent oil:
Take profit – 77,1
Stop-loss – 78,8
This content is for informational purposes only and is not intended to be investing advice.
