Global benchmark Brent Crude is holding above $90 per barrel, supported by supply cuts from Russia and Saudi Arabia. However, growth is limited due to ongoing market concerns over China's economic recovery. The demand outlook remains uncertain.
As noted by analysts at ANZ Bank, in addition to the weak recovery of the Chinese economy, another constraint on the growth of the oil price was a strong dollar. The US currency has been appreciating for eight consecutive weeks.
However, the extension of voluntary cuts by Russia and Saudi Arabia until the end of this year allowed prices to overcome this pressure. On Friday, Brent reached a record high since last November.
Reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) are expected to be released this week. ANZ analysts predict that any sign of strong demand will push commodity prices higher.
Meanwhile, hedge funds are investing in commodities again despite being hit by the fall in the oil price earlier this year. Back then, fund managers were betting on rising demand for oil in China and a subsequent price spike to 2022 levels. However, recession fears, the collapse of a number of banks in the US and the stability of energy supplies from Russia caused a decline in the price of oil.
Nevertheless, after the first half of the year, bullish sentiment prevails again among hedge funds. Many of the prerequisites for the coming rise in commodity prices have emerged. The production of jet fuel in China increased, and the number of domestic flights at the end of August exceeded the pre-pandemic level by 13%.
The oil price chart shows the formation of an uptrend on the daily timeframe.
In terms of wave analysis, the price is forming the third ascending wave. The breakout of the top of the first wave at the level of 88.10 has already taken place. The upward movement may intensify in the near term.
Signal:
The short-term outlook for Brent is to buy.
The target is near the level of 98.00.
Part of the profit should be fixed near the level of 93.40.
A Stop-loss should be placed near the level of 85.90.
The bullish 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.
