Last week, the Brent oil price tested the level of $80 per barrel.
This test was necessary as a technical factor for the subsequent downward movement. The main target remains the same — the level of $45 per barrel.
This target was set by the market in July-August 2020. And the market will be moving to this mark also for a long time — tentatively within two to four years. So, this is a long strategic position for the oil market and we need to be very patient to get this result.
It goes without saying that during this time there will be a large number of intermediate targets lying both above and below the current prices.
At present, the fundamental justification for such a target is the decline in global demand for oil due to the slowdown in economic development of the leading countries, primarily China, as well as significant risks of recession in the U.S. and Eurozone countries. Local geographical crises like the current logistics issues in the Red Sea could become a reason for upward corrections of quotations.
Another fundamental factor for the decline of world oil prices is the quickly realized additional supply from the U.S. shale producers. As soon as the world's cartels start limiting their supply for the sake of maintaining high prices, the shale industry will immediately come into play, saturating the market with large volumes of oil.
At the same time, it should be kept in mind that now there is strong technical support for Brent prices at the level of $70 per barrel, and the market will be overcoming this zone for a very long time, possibly one or two years.
Various geoclimatic catastrophes, hyperinflationary processes and other unpredictable events could prevent this scenario from occurring.
The final recommendation is to sell Brent for the long-term.
Profit could be fixed at $45 per barrel. Loss — at the level of $115 per barrel.