Brent oil quotes, having failed to break above the 74.5 mark at the beginning of the week, have been consolidating near the 72.5 level for the last few days. Disappointed in the quickly interrupted wave of growth, market participants may switch to active sales of oil. Probably, their main target will be testing the support at 71, from which the price has already bounced upwards three times in the last 2 months. It will not be easy to overcome this boundary, but at least one attempt should be enough for the bears.
Traders in the oil market are waiting for the next meeting of OPEC+. Yesterday, the organization postponed the meeting from December 1 to December 5, explaining that a number of officials were attending the summit of the Persian Gulf countries. However, analysts surveyed by Bloomberg and Reuters believe the main reason for the postponement of the decision is the ongoing negotiations on oil production quotas in early 2025. With weak demand for oil, the increase in production is unlikely to take place before April.
Fresh statistics on oil consumption in Asia confirms the need to maintain the current OPEC+ restrictions. According to LSEG Oil Research, countries of the continent imported 26.42 million barrels of oil per day in November. Although volumes rose slightly in monthly terms, the daily average for the 11-month period is still 370 000 barrels behind the figure for the same period in 2023. Oil demand in Asia still does not meet expectations.
Negative dynamics of oil consumption is largely due to the spread of electric vehicles. According to the China Passenger Car Association, hybrids and green vehicles already account for more than 50% of all new sales on the country's market. Because of this, demand for gasoline in China may begin to decline as early as next year. The International Energy Agency estimates that fuel consumption in China will decline by 2.1% per year, while the CITIC forecast suggests an annual drop of 4-5%.
After reaching the level of 71, it is worth closing at least part of short positions on Brent oil, as there is a high probability of further rebound of quotations.
Consider the following trading strategy:
Sell Brent in a range of 72–73. Take profit – 71. Stop loss – 74,5.
This content is for informational purposes only and is not intended to be investing advice.
