Brent oil prices at yesterday's trading session almost continued Wednesday's decline. The price renewed the lowest level since the beginning of the year, slightly missing the level of 74. However, at the end of Thursday all the drawdown was bought back, and now market participants can set up for further development of the rebound. The first target will be 76.5, and then the bulls will focus on the February highs just above 77.
The International Energy Agency's (IEA) monthly oil market report released yesterday was unexpectedly positive. The organization usually takes a more pessimistic stance regarding oil supply and demand. But this time the IEA analysts pleased the producers with the forecast of global surplus being halved to 450,000 barrels per day (bpd). At the same time, demand growth expectations increased from 1 to 1.1 million bpd.
The IEA's main reason to change its position was fears of disruptions in oil production and deliveries from Russia and Iran because of US restrictions. According to Reuters, crude exports from Russia's western ports dropped by 17% year-on-year in January. The estimate of the country's daily oil production was revised from 10.76 to 10.61 million barrels. Expected negotiations between the heads of Russia and the US are still too uncertain to put even a partial lifting of the restrictions into the prices.
Meanwhile, Bloomberg analysts see another reason for the growth in the cost of raw materials. With gas prices at their highest levels over 2 years, European countries are considering expanding the use of oil products for power generation. Natural gas prices are now equivalent to nearly $100 per barrel, so increased burning of gas oil, fuel oil and diesel is becoming more and more likely.
The RSI indicator on the Brent daily chart has returned to the neutral zone, not preventing the continuation of the price rebound. The nearest target for the buyers is the level of 76.5.
Consider the following trading strategy:
Buy Brent oil at the current price. Take profit – 76.5. Stop loss – 74.
This content is for informational purposes only and is not intended to be investing advice.
