Oil prices will be 10% below standard values by the end of 2023. Currently, both benchmark oil grades, WTI and Brent, are on track to close the trading session at their lowest levels since late 2020. At that time, the COVID-19 pandemic undermined demand for oil and led to a significant drop in prices, Reuters reported.
Traders are concerned about the current situation in the global oil market, Bloomberg reported. According to experts, energy supply may exceed demand in the coming quarters. Geopolitical tensions and OPEC+ actions failed to stop the decline in oil prices.
Central banks' measures aimed at fighting inflation additionally hindered the price growth.
As of early December 29, Brent and WTI traded around $77-78 and $71-72 per barrel, correspondingly.
The country's energy stocks declined over the past week, but reserves in Cushing reached the highest level since August. The key oil storage hub is expanding for the 11th week in a row.
Despite OPEC+ cuts, countries outside the alliance increased production volumes. This hindered Saudi Arabia's plans to stabilize the situation in the oil market, Bloomberg commented.
However, according to IG strategist Yeap Jun Rong, oil prices could still be supported by additional OPEC+ restrictions in the first quarter of 2024, a weaker dollar and the ongoing Middle East crisis.
Brent oil prices are forming a local corrective trend on the H6 timeframe. Divergence of the Relative Strength Index (RSI) (standard values) indicates an upward change in the oil rate. The price may move out of the channel next year.
Signal:
The short-term outlook for Brent suggests buying.
The target is at the level of 84.90.
Part of the profit should be taken near the level of 81.40.
A Stop-loss could be set at the level of 73.00.
The bullish trend is short-term, so trade volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
