This week, Brent oil prices reached their lowest level since December 2021 at $68.3 per barrel. The pressure on the cost of oil remains strong and does not allow buyers to organize a full-fledged rebound. Probably, even lower price levels will be needed to stimulate the bulls’ activity. After breaking through the 70-71 range from top to bottom, the next support for Brent may be found near the 66 level.
The oil market is closely watching the news on Chinese demand. Today's data from the General Administration of Customs was again pessimistic: the average daily oil imports for January-February amounted to 10.38 million barrels. For the same period last year, this figure was 3.5% higher. The reduction in energy purchases is due to the Chinese government's support for the transition of the population and businesses to electric cars, Reuters says.
Oil consumption in the United States is also under threat. As Vanda Insights founder Vandana Hari notes, traders are in a state of high anxiety. U.S. trade policy in general and import tariffs in particular are factors slowing economic growth and oil demand. Investors are no longer easily pacified by Trump’s postponements and exemptions on commodities import tariffs.
There are also signs of lower oil prices on the supply side. U.S. officials have increased pressure on Iraq to resume the transit of crude oil from Kurdistan to Turkey. According to Reuters, the U.S. ambassador to Baghdad attended yesterday's talks between the two countries for the first time. If an agreement between them is reached, oil supply in the world market will increase by at least 185,000 barrels per day.
Despite the current wave of falling Brent oil prices, the RSI indicator has not yet reached the oversold territory. In this regard, the downward movement may continue to the 66 level.
Consider the following trading strategy:
Selling Brent oil at the current price. Take profit - 66. Stop loss - 71.
This content is for informational purposes only and is not intended to be investing advice.
