Brent oil prices this week fell to the lowest level since early 2024, approaching the $75 per barrel. Then followed a price rebound, but the bulls failed to regain control of the 80 level. The monthly downtrend is limiting the upside potential of oil prices, so there is a high probability of a renewed decline in the near term. The sellers may target the level of 77.
The oil market slowly recovered after massive sell-offs on fears of an imminent recession in the US. However, even when this factor of pressure on the prices receded, it was quickly replaced by other reasons for negative assessment of the market outlook. China's customs authorities reported continued negative dynamics of oil imports in July, while US refineries are reducing crude consumption due to weak fuel demand.
According to Reuters analysts, the OPEC+ countries' decision to increase oil production from October will worsen the price situation even more. The current dynamics of global oil consumption clearly does not favor the planned increase in production by 500,000 barrels per day by the end of the year. This means that OPEC+ members will either have to cancel production increases in the fourth quarter or accept an even lower cost of crude.
In such conditions, Citi Research experts recommend investors to use local momentum in oil prices to open short positions. By their estimates, Brent prices will fall to an average level of $60 per barrel by 2025. Even if OPEC+ does not boost production, other countries that are not constrained by these limits will do so. As long as the global economic slowdown is weighing on demand, oil prices have little chance to rise significantly.
However, Brent prices still have a small room for growth before they hit the downtrend line. At this point, there is a high probability of a downward price reversal and subsequent movement to the level of 77.
Consider the following trading strategy:
Sell Brent crude oil within the range of 79–80. Take profit – 77. Stop loss – 80.5.
This content is for informational purposes only and is not intended to be investing advice.
