Brent crude oil shows signs of trend reversal amid OPEC+ adaptation and geopolitical risks

Brent crude oil prices are moderately rising on Friday due to the statements of key OPEC+ members about their willingness to adapt the production policy to changing market conditions. Oil prices benefited from the European Central Bank's (ECB) interest rate cut on Thursday, which also raised the likelihood of similar action from the US regulator.

Investors have taken a wait-and-see attitude ahead of the publication of monthly data on the US labor sector. The employment report will have a significant impact on future interest rate decisions by the Federal Reserve (Fed).

Oil prices rose as Saudi Arabia and Russia attempted to reassure markets about the supply agreement. Brent crude contracts are again trading near $80 per barrel after rising 1.9% on Thursday. However, oil prices remain in a downtrend as traders reacted negatively to the decision of the eight OPEC+ members to raise oil production starting from October.

According to Russian Deputy Prime Minister Alexander Novak, the alliance will promptly respond to the market uncertainty. Earlier, the drop in oil prices was caused by a misinterpretation of the OPEC ministers' comments. However, this confusion has now been resolved, the official said.

Oil prices have been declining since early April, partly due to concerns about the demand outlook. But geopolitical risks related to the Middle East conflict keep rising. This may stimulate further price growth.

At the technical level, Brent oil prices are in a downtrend on the D1 timeframe. The price has reached the trend channel resistance during a pullback from the key support level at 76.80. However, divergence of the Relative Strength Index (RSI) (standard values) suggests a possible reversal upward, where resistance does not play a major role.

Signal:

The short-term outlook for Brent oil suggests buying. 

The target is at the level of 84.50.

Part of the profit should be taken near the level of 82.00.

A stop-loss could be placed at the level of 76.50.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.