Brent sell

Brent oil is expected to correct to $88.0 per barrel

05 April 2024 85
Brent oil is expected to correct to $88.0 per barrel

Oil continues its bullish trend amid escalating tensions in the Middle East.

 

The price of global benchmark Brent is near its highest level since October. Israel stepped up preparations for possible retaliation from Tehran after Monday's strike on an Iranian diplomatic compound in Syria, fueling fears of a wider regional conflict.

 

The conflict between Israel and Hamas has led to Houthi attacks on shipping in the Red Sea, driving up transportation costs, but has yet to escalate into a wider war in a region that accounts for about a third of the world's oil supply.

 

In addition, OPEC+ decided earlier this week to continue cutting supply in the first half of the year, keeping global markets tight and bolstering the case for higher prices. A group of key members led by Saudi Arabia recommended no change in policy at an online review meeting. That means production cuts of about 2 million barrels per day will remain in place.

 

Market watchers have become more optimistic in recent weeks. JPMorgan Chase & Co. warned that Brent crude could rise to $100 a barrel this year.

 

Despite the fundamental case for further gains in oil prices, one should keep in mind that prices are technically overbought. There is a strong divergence between the daily chart and the RSI indicator.

Based on the current technical picture, we can conclude that a correction to the level of $88.0 per barrel is imminent.

 


The final recommendation is to sell Brent. Profit could be taken at 88.0.

Loss could be fixed at 92.0.

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

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