At the end of last week, the price of Brent crude oil closed the gap that had formed earlier at $69 per barrel. This closing was characterized by strong, uninterrupted movements. A new gap has now appeared, which the price will seek to close in a bullish direction. The target for the upcoming movement is 70.10.
Considering the long-term scenario of Brent prices falling to $47, the price must gain strength for such a surge. It may consolidate at current levels or make a false bullish breakout to around $90 per barrel. Such a breakout could eliminate bearish positions, whose protective orders are above the upper border of the downward channel, clearly visible on the weekly timeframe.
From a fundamental point of view, the picture is ambiguous. On the one hand, tightening sanctions against the Russian oil and gas sector could create a global oil shortage and support the market. Additionally, US oil inventories fell below forecast expectations last week, which supports prices as well. However, OPEC+ countries are striving to increase oil production, which increases global supply and puts downward pressure on prices. In June, eight OPEC+ countries were expected to increase oil production by 359,000 barrels per day (bpd) compared to May, taking into account commitments to offset excess production, reaching 30.944 million bpd. However, actual production increased by 394,000 bpd, reaching 31.352 million bpd.
The overall recommendation is to buy Brent oil.
Profit could be taken at 70.1. A stop loss could be set at 68.8.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 1% of your deposit.
This content is for informational purposes only and is not intended to be investing advice.
