On Friday, the Brent price fell by 0.5%, demonstrating the second consecutive weekly decline. Oil prices were under pressure amid risk reduction in energy markets.
Nevertheless, in the previous two trading sessions, oil prices received some support from the US government's announcement of a larger-than-expected reduction in crude inventories. Overall, however, broader inventory trends look more bearish this month. U.S. crude stocks have drawn at a slower-than-usual pace for this time of the year and global fuel stocks rose last week.
Meanwhile, production of about 500,000 bpd in the oil sands of Alberta, Canada, could be threatened by wildfires. Fires were recorded within 10 kilometers of the fields. That’s equal to roughly 10% of the total oil output in the province. As much as 1.2 million barrels a day could be within 20 kilometers.
A total of 133 wildfires were burning in Alberta with 52 categorized as out of control amid hot, dry weather. The fires could help push hydrocarbon prices higher.
From the technical point of view, the Brent oil price is forming a head and shoulders reversal pattern on the H4 timeframe. The price, correcting in the zone of the right shoulder, shows signs of decline. The volumes of the Moving Average of the Oscillator (with the parameters 12, 26, 9) are approaching the zero value, indicating the potential fall of the price when it enters the minus zone.
The short-term outlook for the Brent oil price is to sell with the target at 81.00. Part of the profit could be fixed near 83.00. The Stop loss could be placed at 87.00.
The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
