Oil markets are preparing to assess the extent of the duties expected to be imposed by the new US administration on Mexico and Canada, which are two of the largest suppliers of crude oil to the US. White House spokeswoman Karoline Leavitt told reporters that Trump still plans to make good on his promise to impose duties on Canada and Mexico, and he will announce the decision on Saturday.
Investors are also looking forward to a ministerial meeting by the Organization of the Petroleum Exporting Countries and its allies, together called OPEC+, scheduled for February 3.
OPEC+, a group of top oil producers, is set to discuss Trump's efforts to increase US oil production and take a joint stance on the issue.
Trump has publicly called on OPEC and its leading member, Saudi Arabia, to push oil prices down. He also set a goal to maximize US oil and gas production. By the way, US crude oil inventories rose by 3.46 million barrels last week, roughly in line with analysts' forecast of a 3.19 million barrel increase.
However, analysts believe that a price war between the US and OPEC+ is unlikely, as it could be detrimental to both countries. A price war with the US would result in OPEC+ producers maximizing their production in order to lower prices and lead to a decline in shale oil production. In such a scenario, Brent oil prices could fall below $50 as OPEC+ could deploy more than 5 million barrels of oil per day in its spare capacity and this would likely lead to a drop in US shale oil production.
In addition, Brazilian state oil company Petrobras said yesterday that its estimated proven reserves of oil, condensate and natural gas rose to 11.4 billion barrels of oil equivalent last year from 10.9 billion in 2023. Petrobras said 85% of the estimated reserves are oil and condensate, while the remaining 15% are natural gas.
The company said the increase in total reserves came mainly due to the continued development of the Atapu and Sepia fields, as well as good production performance of the Buzios, Itapu, Tupi and Sepia fields.
Thus, Brent prices remain under bearish pressure.
The overall recommendation is to sell Brent oil.
Profits should be taken at the level of 75.0. A Stop loss could be set at the level of 76.0.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
