Buying Brent to close the morning gap up to 82.8

13 May 2024 87
Buying Brent to close the morning gap up to 82.8

Oil prices are exposed to downward pressure amid signs of weak fuel demand and comments from U.S. Federal Reserve officials that dampened hopes for an interest rate cut that could slow economic growth and curb fuel demand in the world's largest economy.

 

Market participants expect the U.S. central bank to keep the key interest rate at the current level for longer, supporting the dollar. A stronger greenback makes dollar-denominated oil more expensive for investors.

 

Weak demand and rising gasoline and distillate inventories in the U.S. ahead of the driving season are also weighing on oil prices.

 

In addition, refiners are increasing supply, while mild weather in the northern hemisphere and slow economic activity are reducing demand.

Another factor contributing to the decline in oil prices is the diminishing geopolitical risk associated with the situation in the Middle East.

 

Still, the market remains supported by expectations that the Organization of the Petroleum Exporting Countries (OPEC+) may extend supply cuts into the second half of the year.

 

The Organization of the Petroleum Exporting Countries (OPEC) will release its market outlook on Tuesday, revealing its view on the global market balance, demand forecasts, and oil supply dynamics.

A report from the International Energy Agency is also due this week.

 

From a technical perspective, Brent crude oil prices formed a small gap in the range of $82.6 to $82.8 per barrel at Monday's open. As such gaps usually tend to close, Brent prices are expected to return to at least the $82.8 level. At best it could go back to the previous local low of 83.2.

 

The overall recommendation is to buy Brent.

Profit could be taken at 82.8. Stop loss could be set at 82.0.

The value of possible loss should not exceed 2% of your deposit.

 

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

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