If we look at the chart of Brent oil, we can see that at the opening of this year the quotes broke through the resistance at the level of 74.50 and developed an upward trend throughout the first week of 2025.
From a technical point of view, this rally was due to the need to close the price gap formed in mid-October last year at the level of $77 per barrel. Now quotes have started to display a reversal, probably to retest the level of 74.50. The support of this reversal pattern is the mark of 75.50.
From the economic point of view, this reversal may be caused by a significant increase in the fuel inventories in the United States.
Gasoline stocks rose by 6.3 million barrels last week to 237.7 million barrels, the U.S. Energy Information Administration said on Wednesday. Analysts had expected a 1.5 million-barrel build.
Distillate stockpiles rose by 6.1 million barrels in the week to 128.9 million barrels, versus expectations for a 600,000-barrel rise.
Increased U.S. fuel inventories prompted some selling, but the downside is limited due to the winter demand season in the northern hemisphere.
Global oil demand is expected to remain strong during January, supported by colder-than-normal winter conditions that increase heating fuel consumption, as well as an earlier start to tourist activity in China due to the Lunar New Year celebrations.
Looking ahead, key factors will be demand trends in China as well as energy and trade policies of the new U.S. administration. Traders are likely to refrain from opening large positions until President-elect Donald Trump takes office on January 20.
For now, traders are waiting for the end of the technical correction of Brent to the 74.50 level.
The final recommendation is to sell Brent from the level of 75.50.
The profit could be fixed at the level of 74.50. The Stop loss could be placed at 76.50.
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 1% of your deposit.
This content is for informational purposes only and is not intended to be investing advice.
