Upward trend in Brent oil prices stopped again at 74

Brent oil prices this week staged a strong rebound from a one-month low of $71. However, at yesterday's trading session when testing the mark of $74 per barrel, the bulls faced active resistance from sellers. This level in early December has already reversed the short-term uptrend in the oil price, and this scenario may well be repeated. The news background of the last few days also contributes to the corrective pullback of the price.

This week, the world's leading energy organizations updated their forecasts for the oil market. The strongest changes occurred in OPEC expectations. The cartel, which traditionally adheres to the most optimistic point of view on oil demand, sharply worsened its forecast for global demand growth in 2024 — from 1.82 to 1.61 million bpd. The forecast for 2025 was also adjusted from 1.54 million bpd to 1.45 million bpd.

The indicators of the December OPEC report became much closer to the pessimistic estimates of the International Energy Agency (IEA). Representatives of the organization have been talking about the impending global oil glut for several months already. Next year, the daily surplus will reach 950 thousand barrels even without easing of OPEC+ restrictions in April. With them the value may exceed 1.4 million barrels.

Against this background, Bank of America (BofA) analysts expect a 10% drop in oil prices in 2025. The experts forecast Brent crude to average $65 per barrel, with WTI at $61 per barrel. A rise in non-OPEC supply and sluggish global growth were at the heart of the analysts' bearish outlook. According to BofA estimates, production will increase by 1.4 million bpd due to higher output in the United States, Argentina, Brazil and Guyana. Meanwhile, demand will rise by only 800,000 bpd.

The range of 73.5–74 can be an interesting option for opening short positions on Brent. A target for the bears could be the level of 72.

The following trading strategy can be suggested:

Sell Brent in the range of 73.5–74. Take profit — 72. Stop loss — 74.7.