Oil prices aim for November highs

26 January 2024 119
Oil prices aim for November highs

Brent oil prices at Thursday's trading session rose above the level of $82 per barrel for the first time since late November. Updating the highs since the beginning of the year is a positive signal, which corresponds to the movement within the local uptrend. Since the start of the current week oil prices have already risen by 4%, and today there could be some profit taking. At the same time, the next growth targets in the range of 82.5–83 remain relevant.


Yesterday, the oil market positively reacted to the publication of the first estimate of the US GDP for last year's fourth quarter. The American economy rose by 3.3%, significantly exceeding analysts' forecasts of 2%. An increasing number of economists are dropping their forecasts of a recession in the US, although the expectations of a slowdown in GDP growth remain intact. In terms of oil product demand, strong economic statistics are an important supportive factor.


Weekly data on US inventories were also a bullish signal for oil prices. The amount of oil reserves decreased by 9.2 million barrels, exceeding analysts' forecasts by more than four times. Moreover, due to the cold weather, US companies reduced their daily production by 1 million barrels at once to a 5-month low of 12.3 million barrels.


According to the new HSBC report, the range of $75–85 per barrel remains relevant for Brent oil prices. On the one hand, the uncertain economic outlook and large reserve capacities of the exporting countries prevent a sharp rise in prices. At the same time, the OPEC+ policy keeps the oil price from falling too much. Such a status quo may persist in the medium term, allowing market participants to focus on trading within the specified range.


There are no barriers to the continuation of the current growth on the daily Brent chart. The RSI indicator is slowly rising, while keeping away from the overbought zone. The next targets, at which traders may decide to partially exit long positions, are the levels of 82.5 and 83.

 


Consider the following trading strategy:


Buy Brent oil in the range of 81–81.5. Take profit 1 – 82.5. Take profit 2 – 83. Stop loss – 79.5.

This content is for informational purposes only and is not intended to be investing advice.

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