On Friday, the Brent oil market opened at $74.19 per barrel, showing a slight recovery after losses that started at the beginning of the week. Brent quotes fell from $76.21 on Monday to $74.31 on Thursday, and were at $74.54 at the time of writing. The price remains below the key level of $75 after a 2.1% drop on Wednesday that canceled out the entire yearly gain.
Brent prices remain under pressure due to geopolitical risks and economic factors. After Trump's inauguration, investors began withdrawing funds from the oil and fuel markets. This led to lower prices. One of the main reasons for such behavior of market participants was the uncertainty in trade relations between the US and China. China is expected to impose retaliatory tariffs against the U.S. starting Monday, which could significantly escalate trade tensions. This situation threatens to slow global economic growth and, as a result, reduce global oil demand.
In addition to trade risks, uncertainty remains over oil supplies from key regions. Tighter sanctions against Iran and Russia create concerns about restrictions on energy exports. In addition, there is a possibility of tariffs on raw material from Canada and Mexico, which could further complicate the market.
According to Reuters, OPEC oil production declined for the second month in January. Total production amounted to 26.53 million barrels per day, down 50 000 barrels from the revised December value. Production growth in the United Arab Emirates (by 90 000 barrels per day) could not compensate for the decline in production in Nigeria and Iran. Goldman Sachs analysts and other experts expect that the tighter restrictions imposed by the US administration on Iran could have an additional impact on oil and gas markets. The nearest important market events include the release of US consumer inflation data and the weekly API report on crude inventories on February 12. This data could have a significant impact on Brent oil prices.
Technical analysis shows that oil reached an overbought zone on January 5 and since then has been holding at this mark. The MACD indicator shows that the market is in a downtrend. Negative histogram values indicate the prevalence of bearish sentiment in the market. The RSI value is below 20, which is usually considered to be the oversold level. However, if the price continues to decline, it may indicate that the market has not reached a bottom yet. Otherwise, there could be a pullback and the price will rise. The macroeconomic indicator is neutral.
Current Recommendation:
Buy Brent at the current price. Take profit — 77,90. A stop-loss — 72,66.
This content is for informational purposes only and is not intended to be investing advice.
