Brent oil quotes this week updated the lows since December 2023, coming close to the level of $72 per barrel. Buyers make timid attempts to seize the initiative, but only yesterday they managed to stop the steady decline in prices. Nevertheless, the results of Thursday's trading session should still not be overestimated, as the news released could well cause a strong upward rebound in oil prices. However, this did not happen, which indicates that pessimism remains in the oil market.
The OPEC+ countries, seeing the worsening demand for commodities, did not decide to increase oil production in October. Now this decision is postponed to December, but even then chances for a positive outcome do not look great. Analysts at JPMorgan do not expect OPEC+ production growth until the end of 2025. If the exporting countries decide to take this step, they will risk collapsing quotations to $60 per barrel.
JPMorgan experts have lowered the forecast for Brent price in the fourth quarter of this year from $85 to $80 per barrel. Next year, the average price of this type of oil will be $75. Even reduction of oil reserves in the U.S. to the minimum since September 2023 did not improve the assessment of the prospects of the global market. Traders tend to ignore the news about the reduction in exports of oil from Libya, giving preference to fears of insufficient demand.
China remains the main cause of negative sentiment in the oil market. According to Bernstein analysts, since the beginning of 2024, oil consumption in China fell by 2% to 14.3 million barrels per day. Excluding the COVID-19, this is the worst result in 15 years. Chinese companies selling refined fuels are also experiencing similar dynamics. Moreover, the decline may intensify to -4% by the end of the year.
Taking into account the strong fall of the current week, now Brent oil quotes may show some rebound. It can be used to open short positions, expecting the price to return to 72.5.
Consider the following trading strategy:
Sell Brent in the range of 73.5–74.5. Take profit – 72.5. Stop loss – 75.5.
This content is for informational purposes only and is not intended to be investing advice.
