The oil price paused its growth last week. It was at the highs that there was news of record hedge fund purchases and consumption of commodities. The situation is no different now. Most investment houses have raised oil's growth targets to $100 per barrel. In such a situation, on the contrary, it seems that the growth is over and now there is going to be a prolonged correction.
On Monday, oil prices showed relative growth. At the end of last week Russia temporarily banned exports of gasoline and diesel.
Hawkish comments from the US Federal Reserve (Fed) members also had a negative impact on oil.
Over the previous three weeks, commodity prices rose by more than 10% as Russia and Saudi Arabia have vowed to keep restricting crude oil exports until the end of the year.
The ban on fuel exports from Russia is likely to end soon, as gasoline prices in the country have fallen by about 20%. The desired effect has been achieved.
In the future, the US will be able to expand oil production thanks to new fields.
The federal court obliged the Biden administration to expand the Gulf of Mexico oil lease sale by the end of September.
In August the authorities decided to yank roughly 6 million acres off the auction block and to impose speed limits on industry vessels in order to preserve the habitat of one of the endangered species of whales.
The Louisiana state regulator found the decision unreasonable. Organizations such as the American Petroleum Institute (API), Chevron Inc. and Shell Offshore Inc. opposed the Biden administration's plan. They risked losing up to $2.2 million in royalties and incurring costs for delaying project construction due to vessel traffic restrictions. As a result, the plaintiffs won, so the sale including the previously withdrawn acreage must be conducted by Sept. 30.
According to the technical analysis, the oil price is consolidating in a narrow range. The general view on oil remains bearish, so a downward breakout of the flat is expected.
The downside target will be the round level of $90 per barrel. It also corresponds to the lower boundary of the uptrend if this scenario is realized by early October. A Stop-loss should be set in case of growth above the maximums of the current consolidation. This is the level of $93.6.
Decrease in the Brent oil price:
Take profit — 90.0
Stop-loss — 93.6