Several fundamental factors are currently supporting oil prices, including those of Brent.
Investors remain cautious, taking into account the potential risks associated with crude in the run-up to the US-Russian summit. Any new restrictions on countries buying Russian oil could make the situation more uncertain and push up prices.
Moreover, the market is being bolstered by anticipation of a Federal Reserve interest rate cut in September. Following moderate US inflation in July, traders are almost sure that there will be a reduction in borrowing costs. According to the CME FedWatch tool, the likelihood of a quarter-point rate cut at the September 16–17 meeting now stands at 99.9%.
Lower borrowing costs are likely to boost oil demand.
However, certain factors may limit price gains in the medium term. Last week, the US Energy Information Administration (EIA) reported an unexpected 3-million-barrel rise in crude inventories.
Further price restraint comes from the International Energy Agency's (IEA) projection that global oil supply will outpace expectations in 2025 and 2026. The driving force behind this is increased output from OPEC and its allies, as well as rising non-OPEC production, particularly in OECD countries.
Taking all these factors into account, there are more reasons for Brent crude to rise in the short term.
From a technical point of view, it would be better to enter the deal at the support level of $65.6.
The overall recommendation is to buy Brent crude from the level of $65.6.
Profits should be taken at the level of $66.2. Stop Loss could be set at $65.3.
The volume of your open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance doesn’t allow opening a position of this size, it’s better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
