Oil prices are rising on Monday amid a decline in global fossil fuel reserves. The decrease in oil export by Saudi Arabia and Russia offsets market concerns over global oil demand. It is taking place amid interest rate hikes by central banks.
Earlier, prices of the Brent and WTI crude benchmarks have dropped for the first time in the last 7 weeks. Both benchmarks suffered 2% losses after the US dollar had strengthened the previous week. The U.S. currency rose on expectations of a possible interest rate hike by the Federal Reserve (Fed). The worsening crisis in China's real estate sector has increased investors' concerns about the country's slowing economic growth, thereby putting pressure on global oil demand.
Supply in the commodity market is tightening as oil exports from OPEC+ countries are expected to shrink for the second consecutive month in August, said Stefano Grasso, senior portfolio manager at 8VantEdge.
According to analysts, OPEC+ will continue controlling the situation in the oil market. However, there may be a reversal of this trend in case of recession in the global economy or a fall in demand for oil.
The Brent crude oil chart shows that a correction has formed in the range of 82.50-89.10. This weak volatility is explained by investors’ anticipation of the Fed regional governors meeting this week in Jackson Hole. Market participants will focus on the Fed Chairman Jerome Powell's speech on Friday.
From the viewpoint of wave analysis, the price is now in the process of forming the fifth ascending wave on the H4 timeframe.
The Relative Strength Index divergence (standard values) has proven its forecast for a decline. The curve has broken through the divergence resistance, which allows the price to start a new rise.
Signal:
The short-term outlook for Brent crude oil is to sell.
The target is at the level of 89,10
Part of the profit should be fixed near the level of 86.75.
A Stop-loss should be placed near the level 82,40
"Bullish" trend has a short-term character, so it is suggested to pick up the trading volume not more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
