Unoptimistic start for oil this week. Brent is declining

Last week, Brent oil prices increased gradually, starting from $71.05 per barrel and reaching $74.36. However, this week the prices began with a decline.

Concerns about supply shortages became the main factor contributing to the oil price growth. They are driven by potential tightening of the restrictions against Iranian, Russian and Venezuelan oil. In addition, the United Arab Emirates (UAE), a key member of the OPEC+ alliance, has already announced its plan to reduce oil supply in 2025. This decision is part of a collective effort to regulate and maintain oil prices, which shows that market participants are deeply concerned about their current levels.

Further decline in oil prices is limited by fears of supply disruptions, especially if the United States strengthens the restrictions against major producers, such as Russia and Iran. At the same time, lower interest rates may stimulate economic growth and increase demand for oil, which would support the rise in prices.

Traders are currently waiting for the interest rate decision by the US Federal Reserve (Fed), which will be announced on December 17–18. This could have a significant impact on the market, as a possible rate cut may lead to an additional rise in oil prices. However, it is unlikely that this increase will break through the support zone. At the moment, there is an overproduction in the market, so the current situation will only allow the prices not to fall even lower.

The main recommendation for now is to sell Brent oil when it reaches the level of $73.21–74.

Suggested options for trading: 

Place a Take Profit at the level of $71.05 and a Stop Loss at the level of $74.69.

Overall, the oil market remains under pressure from external factors, and traders should closely monitor the situation in order to timely react to any changes in the market and make rational decisions.