Brent, having rebounded from the $68 per barrel level, is now approaching its next technical target at $47. This price level was initially established in late August 2020 and served as the launch point for Brent's unprecedented six-month rally to its all-time high reached in March 2022.
The fundamental drivers behind Brent's decline remain unchanged: weakening global commodity demand amid ongoing trade tensions and economic uncertainty. Companies are being forced to freeze expansion plans, decline new production orders, and reduce their workforce.
Additionally, several OPEC+ members will propose accelerating production growth in June for the second consecutive month. A substantial oil price decline appears likely if exporting countries follow through with increased output.
A preliminary Reuters analyst poll on Monday indicated US crude inventories probably grew by approximately 500,000 barrels last week, which would further pressure oil prices downward.
The talks between Iran and the US are progressing positively, reducing escalation risks that could trigger additional American sanctions. The Washington-Tehran dialogue may eventually lead to eased restrictions on Iranian oil exports. Furthermore, Iran is positioning its sanctioned economy as a potential investment opportunity for US businesses.
The spread between the two nearest Brent contracts has widened in backwardation ahead of expiration, with the June contract trading at a premium to July. This reading marks the highest level in nearly three months, signaling strong bearish pressure in the market.
The overall recommendation is to sell Brent.
Profits should be taken at the level of $47 per barrel. A Stop loss could be set at the level of $80.
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.
