The Fed's key interest rate cut supports global oil prices, as lower borrowing costs should boost manufacturing activity and stimulate energy demand in the long term.
In addition, as the latest report of the Energy Information Administration showed, the extremely low level of crude oil reserves in the U.S. also contributes to the growth of oil prices.
Further escalation in the Middle East will keep the oil markets on edge in the short term and oil prices will be under upward pressure.
On the other hand, in the medium term of the next 2–3 quarters, oil prices will be mainly in the bearish zone due to the slowdown of economic growth in the main oil consuming countries, primarily in the USA and China. China's oil refinery output in August fell 6.2% from a year earlier, official data showed, declining for the fifth month.
Due to extremely weak demand, Saudi Arabia's crude oil exports fell to 5.741 million barrels per day (bpd) — the lowest figure since August 2023. It’s worth noting that Saudi Arabia is the world's largest crude oil exporter.
From the technical point of view, Brent prices are now bounded from above by resistance at $75 per barrel and support at $70 from below. It’s likely that until there are some significant shifts in the current supply/demand balance, Brent prices will remain within this channel, limited by the levels of $70.0–$75.0 per barrel.
Now the Brent price is approaching the resistance level at $75.0 and it’s likely that a technical downward breakdown will take place when the price reaches it.
The final recommendation is to sell Brent.
The profit could be fixed at the level of 72.0. The Stop loss could be placed at 77.0.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, doesn’t exceed 2% of your deposit.
This content is for informational purposes only and is not intended to be investing advice.
