Brent oil is expected to trade sideways around 72.77 until year-end

At the beginning of the week, there was a controversial situation: Brent oil quotes first rose amid low trading activity ahead of the Christmas holidays, and then turned downward under pressure from the strengthening U.S. dollar. A rise in the DXY index, which reflects the strength of the U.S. currency, has made dollar-quoted commodities less appealing to investors, leading to lower demand for oil.

Monetary policy of the Federal Reserve continues to influence the market. Despite the expected interest rate cut in June, the bank's updated forecasts turned out to be more hawkish than previously expected. This caused a negative market reaction: stocks fell sharply, bond yields rose, and the dollar strengthened. This reaction emphasizes investors' continuing concerns about inflation and the prospects for slower economic growth.

Nevertheless, oil found support on Tuesday as Brent futures rose to $73 per barrel, recovering some of its earlier losses. This was helped by fresh data from the US, which showed that the key consumer economy remained strong at the end of the year. In addition, inflation data (PCE index) published on Friday was slightly better than expected, which eased investors' concerns about the Fed tightening its monetary policy.

At the same time, the market is also affected by supply-related factors. In particular, reduced concerns about supplies to Europe after reports of the Druzhba pipeline resuming operation also limited the potential for price growth. Last week, there were technical problems at a Russian pumping station, which led to a temporary halt of the supplies. The reopening of the Druzhba pipeline and the restoration of crude supplies to Hungary should reduce market tensions, which will affect prices in the future.

In general, a sideways trend is expected to persist until the end of the year due to the lack of powerful market drivers. In such a situation, oil prices are likely to fluctuate in a narrow range until new drivers for movement appear. However, it should be noted that trading activity in the market on Christmas Eve is reduced, as the US and European stock exchanges will be closed on Wednesday. 

The main recommendation for now is to sell Brent in the range of 72.77–72.96. Take profit – 72,39. Stop loss – 72,97.