Brent oil prices at the opening of the day and week broke through local resistance and almost hit the level of $72 per barrel. This impulse was most likely triggered by the US-led operation in the Red Sea, which added tension and threatened the oil transportation routes in the Middle East.
In the short term, Brent prices might attempt to close the small gap formed at the opening and move back to 72, because this level is now acting as a strong magnet for the prices and should be tested.
On higher timeframes, Brent prices have entered a multi-year support zone, and it requires a very strong news trigger to break it through. However, the potential for such a bearish breakdown has been building up over the last few months. One of the fundamental reasons for the price decline is the slowdown in the global economy caused by the trade standoff initiated by Trump.
The current oil balance suggests that global supply could exceed demand by about 600,000 barrels per day (bpd) this year. If OPEC+ extends the lifting of production cuts beyond April, no longer curbing supply from the group's members that are currently producing above their quotas, another 400,000 bpd could be added to the market.
But as long as there is no such news that could push the prices downward, Brent will be supported by a short-term bullish momentum. One of the possible factors that will contribute to the short-term growth of oil prices is China's new initiatives to stimulate economic growth, which could potentially boost demand for energy.
The overall recommendation is to buy Brent oil.
Profits should be taken at the level of 72.0. A Stop loss could be set at the level of 69.5.
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.
