Buying Brent with target of $80 per barrel

04 June 2024 141
Nikolai
Nikolai

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1st in the segment "Oil and gas"
Buying Brent with target of $80 per barrel

The OPEC+ meeting on Sunday seemed to disappoint investors as it showed the participants' determination to get more production quotas for their countries. In other words, the group's restrictive approach to support prices is more of a declaration than an actual plan of action. So, the oil market reacted with falling prices.


Moreover, the downside potential for oil prices was indicated prior to the meeting. According to CME Group data as of May 31 (last Friday), the volume of put options on crude oil was 119,302 and the volume of call options was 82,318. So, the volume of bids to sell crude oil was 1.45 times higher than the volume of bids to buy.


After yesterday's drop in oil prices, the situation has slightly changed. Many market participants believed that yesterday's decline had offset the weak OPEC+ data, and the market is now preparing for an upward correction at the very least. As of 08:00 (GMT+3) on June 4, put options volume totals 132,297 and call options volume totals 117,266.


So, the ratio of sales to purchases reduced to 1.13.


If the downward movement of oil prices, albeit at a slower pace, continues this week, it is likely that in 2–3 days the buy/sell parity will be reached, followed by an upward movement. Moreover, at the start of the correction the price is likely to move in a flat range, and then it will go upwards.


From a technical point of view, there is a clear target for Brent oil at the round level of $80 per barrel. The RSI indicator, which has dropped below 20%, also suggests that Brent oil is strongly oversold.


The overall recommendation is to buy Brent oil with a target of $80.0 per barrel.

Profits should be taken at the level of 84.0. A Stop-Loss could be set at the level of 75.8.

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


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

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Nikolai
Nikolai

Listed among the best MarketCheese authors
1st in the segment "Oil and gas"
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