This week, Brent oil quotes continued to decline, reaching lows since mid-June. However, in an attempt to consolidate below the level of $80 per barrel, the bulls seized the initiative, as a result of which by the end of the trading session on Thursday, the entire drawdown was bought back. Together with reversal signals on technical indicators, it speaks in favor of a high probability of price rebound upward. In this case, the next benchmark could be the mark of 82.5.
The trigger for the impetus for the growth of oil quotations was the release of statistics on U.S. GDP for the second quarter. According to the first estimate, the U.S. economy grew by an impressive 2.8%. The actual data significantly outpaced the forecast of 2%, but did not cause a worsening of expectations regarding the Fed's monetary policy. The imminent start of the rate cut cycle against the backdrop of stable economic development is a very favorable combination for demand in the oil market.
In addition, on the supply side of oil is not expected to grow significantly both in the second half of this year and in 2025. Goldman Sachs analysts keep the forecast for the Brent barrel price at $75-90. In this case, it does not matter much who will become President of the United States in the November elections. Goldman Sachs experts believe that the increase in the supply of oil in any case will be restrained.
Meanwhile, fears are growing in Canada about the decline in oil production due to forest fires. The first half of the summer was relatively favorable for local companies, but now their situation is deteriorating. Reuters estimates that a third of active fires are out of control and may reduce oil production by 0.4 million barrels per day (bpd). As a precaution, Imperial Oil already reduced the number of staff at the Kearl plant, with a capacity of 275 000 bpd.
The RSI indicator on the daily chart of Brent oil reached the oversold zone and bounced upwards, forming a full-fledged buy signal. The level of 82.5 can be considered as the nearest target for the upward movement.
The following trading strategy may be offered:
Buy Brent at the current price. Take profit – 82.5. Stop-loss – 80.
This content is for informational purposes only and is not intended to be investing advice.
