Despite a slight increase in oil prices today during early trading, the largest weekly decline since March is expected. This is due to the Fed's tight monetary policy. Maintaining high interest rates for an extended period of time may slow down economic growth and reduce demand for energy products.
Other reasons for the decline in oil prices were the weak data on gasoline consumption and the increase in gasoline stocks in the United States. Vishnu Varathan of Mizuho Bank said that lower gasoline demand is driven by the negative impact of inflation on household budgets. He added that oil prices will remain volatile in the first quarter as a result of tight supplies.
Benchmark oil grades Brent and WTI reached a record high of 2023 last week. This week, they fell by 11.8% and 8.8%, correspondingly.
Investors' concerns about rising government spending and budget deficits in the U.S. led to a sharp sell-off in the debt market. Treasury bonds fell to a 17-year low. This added to worries about a slowdown in the global economy.
The OPEC+ meeting was also held this week, and the alliance did not change its current oil production policy.
Today investors' attention will be centered on the country's monthly jobs report, while next week they will be focused on the U.S. Consumer Price Index and China's economic data. These indicators may change the current price dynamics.
Brent crude oil prices broke out of the uptrend on the daily timeframe.
In terms of wave analysis, the price is forming the third descending wave on the H4 timeframe. The last wave has realized its full potential. The Stochastic Oscillator (standard values) is showing divergence, which confirms that the third descending wave may be completed. This indicates a soon reversal of the trend.
The most favorable positions for buying are in the range of 82.30–85.20.
Signal:
The short-term outlook for Brent crude oil suggests buying.
The target is at the level of 90.60.
Part of the profit should be taken near 87.00.
The Stop-loss is set at 79.80.
Bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
