March growth targets for Brent are $84 and $87

In the last month, the Brent oil price has been moving in the range of $81-$84 per barrel.

What are the immediate prospects for this crude oil brand?

The fundamental growth drivers are the following:

- The OPEC+ decision to extend its oil production cuts through the second quarter.

Meanwhile, Russia is planning to reduce oil production and exports by another 471 000 barrels per day. If these cuts are implemented, the market will lose a considerable portion of supplies, which may lead to an increase in energy prices.

Tensions in the Middle East and supply disruptions in the Red Sea.

- Supply difficulties are partially mitigated by the exploration and development of alternative transportation routes, but this process takes a long time.

- Strong energy demand.

At the end of last year, oil demand in the US surged to a four-year high. The Energy Information Administration (EIA) expects it to remain at this level for the rest of this year.

According to the laws of the market, an increase in demand combined with a shortage of supply leads to an increase in prices.

The question is how fast and to what extent the prices will rise.

The following factors may increase volatility and affect the pace of growth of Brent prices until the end of March:

1. OPEC's Monthly Oil Market Report of March 12;

2. US Fed interest rate decision scheduled for March 20;

3. API and EIA weekly reports on US crude oil inventories.

The OPEC report is expected to be optimistic, while the US key rate is supposed to remain unchanged. These factors along with small shifts in the US oil inventories stimulate moderate price growth.

Any unexpected major events in the Middle East, a sudden easing of the Fed's monetary policy, and a significant decline in the US oil inventories will significantly accelerate the growth of oil prices.

Technical Analysis Overview

The Brent prices are fluctuating between the Fibonacci levels of 38.2% and 50%, getting ready to break the latter. This is indicated by the breakdowns of the level of $84 on March 1 and March 4.

The consolidation above $84 will open a way to growth up to $87 (Fibo level of 61.2%). It coincides with the Goldman Sachs' expectations for the summer period.

The DeMarker indicator is in the uncertain zone, which also suggests the remaining upside potential.

Trading plan

Buy Brent from the market with the targets Take Profit 1 = 84, Take Profit 2 = 85.5, Take Profit 3 = 87.

Protect position with Stop Loss = 81.

Successful trading to everyone!