EIA, OPEC and IEA monthly oil market reports in focus
Brent: US CPI sparked moves of ↑ 1.9% & ↓ 1.2% over past year
Technical levels: 200-day SMA, $76.00 and $74.00
Oil benchmarks are up almost 2% this week as tighter Russian crude supply overshadowed fears around Trump’s expanding tariffs.
Data from Russia revealed that production in January slipped below the nation’s OPEC+ quota. This adds to the rising concerns over supply following US sanctions on Iran’s oil exports.
Mounting geopolitical tensions in the Middle East amid Trump’s involvement could compound supply fears, fuelling oil’s upside gains.
Brent has climbed above $76.00, while WTI crude is trading at $73 as of writing.
Despite the recent rebound, Trump’s tariff drama could create obstacles down the road.
Trump recently imposed 25% tariffs on US steel and aluminium imports, scheduled to take effect on March 12.
He also plans to slap reciprocal tariffs sometime this week that will affect ‘everyone’.
Higher tariffs could threaten global growth, hitting demand for oil and resulting in lower prices. This uncertainty may force OPEC+ to delay increasing production beyond April 2025.
Regarding the week ahead, oil could be rocked by a cocktail of high-risk events.
Three of the most influential oil forecasters – EIA, OPEC and EIA will publish their latest monthly market outlooks. Fed Chair Jerome Powell’s 2-day testimony and the latest US CPI could inject oil prices with additional volatility.
Here is what you need to know:
1) Oil monthly market outlooks
The Energy Information Administration (EIA) is scheduled to publish its monthly oil market on Tuesday afternoon.
On Wednesday, OPEC will publish its latest oil market report and on Thursday the International Energy Agency (IEA) releases its own.
Any fresh insight into the outlook for oil markets and demand forecasts among other themes may move Brent/Crude prices.
Lower US interest rates could stimulate economic growth, fueling oil demand. Lower rates may also weaken the dollar, boosting oil which is priced in dollars. The same is true vice versa.
Over the past 12 months, the US CPI has triggered upside moves on Brent of as much as 1.9% or declines of 1.2% in a 6-hour window post-release.
3) Technical forces
Brent has staged a solid rebound from $74 with prices trading above the 50 and 100-day SMA.
A solid daily close above $76 could encourage a move toward the 200-day SMA at $77.50 and $78.40.
Should prices slip back below $76, bears may target the 50-day and 100-day SMA before retesting $74.
The Dow Jones Index (US30) was up 0.30% at Wednesday’s close. The S&P 500 Index (US500) was up 0.61%. The Nasdaq Technology Index (US100) added 1.33%. US stocks closed solidly higher yesterday, helped by strong earnings and promising corporate developments while markets assessed the implications of President Trump’s policy changes. Netflix rose by 9.7% after reporting a record increase in new subscribers. Additionally, Procter & Gamble shares added 1.9% on strong quarterly results. Oracle increased by 6.7%, delivering a nearly 20% weekly gain after announcing a joint venture with SoftBank and OpenAI related to a $500 billion artificial intelligence investment initiative. Nvidia rose by 4.4% and Microsoft added 4.1%, joining the broader technology rally.
Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 1.01%, France’s CAC 40 (FR40) closed higher by 0.86%, Spain’s IBEX 35 (ES35) fell by 0.37%, and the UK’s FTSE 100 (UK100) closed negative 0.04%. On Wednesday, the DAX Index closed above a new record high of 21,259, posting its eighth consecutive session of gains and outperforming its European peers. The index was boosted by strong earnings from Adidas and optimism about large-scale investments in artificial intelligence. In Davos, ECB President Christine Lagarde warned Europe to anticipate possible changes in US trade policy, including selective tariffs under President Trump. She advocated economic reforms, supported the ECB’s cautious approach to lowering interest rates and cited energy prices as the main inflationary problem.
WTI crude prices fell to as low as $75 a barrel on Thursday, retreating for a fifth straight session after an industry report showed a new rise in US crude inventories. API data showed a 1 million barrel increase in crude inventories last week, the first rise after five weeks of declines. Traders also continued to assess the potential impact on energy markets of President Trump’s proposed tariffs on China, the European Union, Canada and Mexico, as well as warnings of sanctions on Russia if President Putin does not work to end the war in Ukraine.
The US natural gas (XNG/USD) prices rose to $3.9/MMBtu as cold temperatures led to record demand. On January 21, the coldest day in five years, heating demand surged, pushing spot gas and electricity prices to multi-year highs. Analysts expect energy companies to draw more than 200 billion cubic feet of gas from storage for two consecutive weeks, reversing a small inventory surplus compared with the five-year average.
South African inflation rose slightly to 3% in December 2024, up from 2.9% in November, but below the 3.2% projection. This rate remains well below the Reserve Bank of South Africa’s preferred average target of 4.5%. Core inflation, which excludes volatile categories such as food, soft drinks, fuel and energy, fell to 3.6% in December 2024, the lowest since February 2022, down from 3.7% in November.
Asian markets traded without a single dynamic yesterday. Japan’s Nikkei 225 (JP225) added 1.58%, China’s FTSE China A50 (CHA50) was down 1.48%, Hong Kong’s Hang Seng (HK50) was down 1.63%, and Australia’s ASX 200 (AU200) was positive 0.33%.
Singapore’s annualized inflation rate for December 2024 was 1.6%, unchanged from the previous month and above market expectations of 1.5%. Meanwhile, the annual core inflation rate fell to 1.8%, the lowest in three years, down from a 1.9% rise in November but above market estimates of a 1.7% rise.
S&P 500 (US500) 6,086.37 +37.13 (+0.61%)
Dow Jones (US30) 44,156.73 +130.92 (+0.30%)
DAX (DE40) 21,254.27 +212.27 (+1.01%)
FTSE 100 (UK100) 8,545.13 +3.16 (+0.04%)
USD Index 108.25 (+0.17%)
News feed for: 2025.01.23
Japan Trade Balance (m/m) at 01:50 (GMT+2);
Singapore Inflation Rate at 07:00 (GMT+2);
Norway Norges Bank Interest Rate Decision at 11:00 (GMT+2);
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Brent crude oil prices fell below 73 USD per barrel on Friday, reflecting ongoing downward pressure. The market is poised to close the week with losses as a robust US dollar weighs heavily on commodity prices.
This week, the US Federal Reserve signalled a measured approach to reducing borrowing costs in 2025, sending the US dollar to a two-year high. The dollar’s strength has raised concerns about a dampened outlook for global fuel demand, particularly in emerging markets where dollar-denominated commodities become more expensive.
Concerns from China add to market anxiety
The ongoing unease about China’s economic recovery adds to the bearish sentiment. Sinopec, the country’s largest refiner, announced that domestic petrol demand likely peaked last year. This revelation has significantly clouded the outlook for 2025 as China’s role as a key driver of global energy consumption diminishes. China’s reduced demand has cast a long shadow over global crude markets, leading to further downward price pressures.
Mixed signals from supply dynamics
Despite the weak demand signals, the supply side has provided mixed indicators. Earlier in the week, data from the US Department of Energy showed reduced oil reserves, temporarily bolstering prices. However, this bullish factor was short-lived. Kazakhstan’s decision to support the extended production cuts under OPEC+ was another potentially supportive signal, but it has failed to provide sustained relief to oil prices amid broader concerns.
The structural expansion of production outside OPEC, particularly in the US and other non-OPEC nations, further complicates the outlook. Combined with China’s declining appetite for energy, these factors suggest that oil prices may end 2024 on a subdued note, with limited prospects for a significant recovery.
Technical analysis of Brent oil
H4 chart analysis: on the H4 timeframe, Brent continues to trade within a broad consolidation range around the 73.13 USD level. The market recently extended this range upwards to 73.40 USD. However, a downward move to 71.93 USD appears imminent. If the market manages to break out of this range to the upside, the next target lies at 75.05 USD, with the potential for further gains towards the 80.00 USD level.
From a technical standpoint, the MACD indicator supports this scenario, with the signal line positioned below the zero level near recent lows. This indicates that the market could soon attempt a reversal towards higher levels, potentially marking the beginning of a new growth wave.
H1 chart analysis: on the H1 chart, Brent is also consolidating around 73.13 USD. The current wave structure suggests a decline towards 71.93 USD, followed by an expected corrective wave to return to 73.13 USD. If this resistance is breached, the market may gain momentum, with an upward trajectory targeting 75.05 USD and potentially higher levels.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Brent crude oil prices have declined to 71.65 USD per barrel as the commodity market remains tense ahead of this week’s postponed OPEC+ meeting, now rescheduled for Thursday, 6 December. The market is concerned about the direction of future global oil supply amid fears of oversaturation. The prevailing expectation is that OPEC+ might delay its planned increase in oil supply for the third time, reflecting persistent supply uncertainties.
Despite these pressures, there are optimistic signals from the oil sector, particularly China, where a resurgence in production activity is seen as a sign of gradual economic improvement in one of the world’s largest importers of raw materials. This development could bolster the energy sector.
The geopolitical landscape remains mixed, with traders closely monitoring tensions in the Middle East. Any escalation could heighten regional instability and affect the overall oil supply dynamics in these areas.
So far, the recent strengthening of the US dollar has not significantly impacted oil prices. However, future market dynamics could shift as global economic conditions evolve.
Technical analysis of Brent Oil
H4 chart: the market is navigating a broad consolidation range centred around the 73.33 level, with recent extensions downward to 71.55. An upward movement towards 73.33 is anticipated today. Should the price exit this range on the higher side, there may be potential for a growth wave targeting 75.15, potentially extending up to 80.00. The MACD indicator supports the bullish Brent outlook, with its signal line below zero but pointing upwards.
H1 chart: Brent has found support at 71.55, initiating a growth wave towards 73.33. Upon reaching this level, a compact consolidation range might form. A breakout above this range could lead to a rise towards 75.15. This potential growth trajectory is corroborated by the Stochastic oscillator, with its signal line currently above 50 and trending towards 80.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
This relatively long transit time is a result of the use of traditional chemical rocket fuel. An alternative technology to the chemically propelled rockets the agency develops now is called nuclear thermal propulsion, which uses nuclear fission and could one day power a rocket that makes the trip in just half the time.
Nuclear fission involves harvesting the incredible amount of energy released when an atom is split by a neutron. This reaction is known as a fission reaction. Fission technology is well established in power generation and nuclear-powered submarines, and its application to drive or power a rocket could one day give NASA a faster, more powerful alternative to chemically driven rockets.
NASA and the Defense Advanced Research Projects Agency are jointly developing NTP technology. They plan to deploy and demonstrate the capabilities of a prototype system in space in 2027 – potentially making it one of the first of its kind to be built and operated by the U.S.
Nuclear thermal propulsion could also one day power maneuverable space platforms that would protect American satellites in and beyond Earth’s orbit. But the technology is still in development.
Nuclear-powered rockets could one day enable faster space travel. NASA
Nuclear versus chemical propulsion
Conventional chemical propulsion systems use a chemical reaction involving a light propellant, such as hydrogen, and an oxidizer. When mixed together, these two ignite, which results in propellant exiting the nozzle very quickly to propel the rocket.
Scientists and engineers are working on nuclear thermal propulsion systems that would take hydrogen propellant, pump it into a nuclear reactor to generate energy and expel propellant out the nozzle to lift the rocket. NASA Glenn Research Center
These systems do not require any sort of ignition system, so they’re reliable. But these rockets must carry oxygen with them into space, which can weigh them down. Unlike chemical propulsion systems, nuclear thermal propulsion systems rely on nuclear fission reactions to heat the propellant that is then expelled from the nozzle to create the driving force or thrust.
In many fission reactions, researchers send a neutron toward a lighter isotope of uranium, uranium-235. The uranium absorbs the neutron, creating uranium-236. The uranium-236 then splits into two fragments – the fission products – and the reaction emits some assorted particles.
Fission reactions create lots of heat energy.
More than 400 nuclear power reactors in operation around the world currently use nuclear fission technology. The majority of these nuclear power reactors in operation are light water reactors. These fission reactors use water to slow down the neutrons and to absorb and transfer heat. The water can create steam directly in the core or in a steam generator, which drives a turbine to produce electricity.
Nuclear thermal propulsion systems operate in a similar way, but they use a different nuclear fuel that has more uranium-235. They also operate at a much higher temperature, which makes them extremely powerful and compact. Nuclear thermal propulsion systems have about 10 times more power density than a traditional light water reactor.
Nuclear propulsion could have a leg up on chemical propulsion for a few reasons.
Nuclear propulsion would expel propellant from the engine’s nozzle very quickly, generating high thrust. This high thrust allows the rocket to accelerate faster.
These systems also have a high specific impulse. Specific impulse measures how efficiently the propellant is used to generate thrust. Nuclear thermal propulsion systems have roughly twice the specific impulse of chemical rockets, which means they could cut the travel time by a factor of 2.
Nuclear thermal propulsion history
For decades, the U.S. government has funded the development of nuclear thermal propulsion technology. Between 1955 and 1973, programs at NASA, General Electric and Argonne National Laboratories produced and ground-tested 20 nuclear thermal propulsion engines.
But these pre-1973 designs relied on highly enriched uranium fuel. This fuel is no longer used because of its proliferation dangers, or dangers that have to do with the spread of nuclear material and technology.
High-assay, low- enriched uranium fuel has less material capable of undergoing a fission reaction, compared with highly enriched uranium fuel. So, the rockets needs to have more HALEU fuel loaded on, which makes the engine heavier. To solve this issue, researchers are looking into special materials that would use fuel more efficiently in these reactors.
NASA and the DARPA’s Demonstration Rocket for Agile Cislunar Operations, or DRACO, program intends to use this high-assay, low-enriched uranium fuel in its nuclear thermal propulsion engine. The program plans to launch its rocket in 2027.
As part of the DRACO program, the aerospace company Lockheed Martin has partnered with BWX Technologies to develop the reactor and fuel designs.
The nuclear thermal propulsion engines in development by these groups will need to comply with specific performance and safety standards. They’ll need to have a core that can operate for the duration of the mission and perform the necessary maneuvers for a fast trip to Mars.
Ideally, the engine should be able to produce high specific impulse, while also satisfying the high thrust and low engine mass requirements.
Ongoing research
Before engineers can design an engine that satisfies all these standards, they need to start with models and simulations. These models help researchers, such as those in my group, understand how the engine would handle starting up and shutting down. These are operations that require quick, massive temperature and pressure changes.
The nuclear thermal propulsion engine will differ from all existing fission power systems, so engineers will need to build software tools that work with this new engine.
My group designs and analyzes nuclear thermal propulsion reactors using models. We model these complex reactor systems to see how things such as temperature changes may affect the reactor and the rocket’s safety. But simulating these effects can take a lot of expensive computing power.
Although many countries have explicitly promised to reduce fossil fuel subsidies to combat climate change, this has proven difficult to accomplish. As a result, fossil fuels remain relatively inexpensive, and their use and greenhouse gas emissions continue to grow.
I work in environmental and energy law and have studied the fossil fuel sector for years. Here’s how fossil fuel subsidies work and why they’re so stubborn.
Others are less visible. A tariff on an imported product, for example, can subsidize domestic manufacturers of that product. More controversially, some would argue that when a government fails to make an industry pay for damage it causes, such as air or water pollution, that also amounts to a subsidy.
Subsidies, especially in this broader sense, are widespread throughout the global economy. Many industries receive benefits through public policies that are denied to other industries in the same jurisdiction, such as tax breaks, relaxed regulations or trade supports.
Governments employ subsidies for political and practical reasons. Politically, subsidies are useful for striking bargains or shoring up political support. In democracies, they can mollify constituencies otherwise unwilling to agree to a policy change. The 2022 Inflation Reduction Act, for example, squeaked through Congress by subsidizing both renewable energy and oil and gas production.
Practically, subsidies can boost a promising young industry such as electric vehicles, attract business to a community or help a mature sector survive an economic downturn, as the auto industry bailout did in 2008. Of course, policies can outlive their original purpose; some of today’s petroleum subsidies can be traced to the Great Depression.
How are fossil fuels subsidized?
Fossil fuel subsidies take many forms around the world. For example:
In Saudi Arabia, fuel prices are set by the government rather than the market; price ceilings subsidize the price citizens pay for gasoline. The cost to state-owned oil producers there is offset by oil exports, which dwarf domestic consumption.
Indonesia also caps energy prices, then compensates state-owned energy companies for the losses they bear.
In the United States, oil companies can take a tax deduction for a large portion of their drilling costs.
Other subsidies are less direct, such as when governments underprice permits to mine or drill for fossil fuels or fail to collect all the taxes owed by fossil fuel producers.
Estimates of the total value of global fossil fuel subsidies vary considerably depending on whether analysts use a broad or narrow definition. The Organization for Economic Cooperation and Development, or OECD, calculated the annual total to be about US$1.5 trillion in 2022. Tche International Monetary Fund reported a number over four times higher, about $7 trillion.
Why do estimates of fossil fuel subsidies vary so dramatically?
Analysts disagree about whether subsidy tabulations should include environmental damage from the extraction and use of fossil fuels that is not incorporated into the fuel’s price. The IMF treats the costs of global warming, local air pollution and even traffic congestion and road damage as implicit subsidies because fossil fuel companies don’t pay to remedy these problems. The OECD omits these implicit benefits.
But whichever definition is applied, the combined effect of national policies on fossil fuel prices paid by consumers is dramatic.
Oil, for example, is traded on a global market, but the price per gallon of petrol varies enormously around the world, from about 10 cents in Iran, Libya and Venezuela – where it is heavily subsidized – to over $7 in Hong Kong, the Netherlands and much of Scandinavia, where fuel taxes counteract subsidies.
What is the world doing about fossil fuel subsidies?
Global leaders have acknowledged that subsidies for fossil fuels undermine efforts to address climate change because they make fossil fuels cheaper than they would be otherwise.
In 2009, the heads of the G20, which includes many of the world’s largest economies, issued a statement resolving to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” Later that same year, the governments of the Asia-Pacific Economic Cooperation forum, or APEC, made an identical pledge.
In 2010, 10 other countries, including the Netherlands and New Zealand, formed the Friends of Fossil Fuel Subsidy Reform group to “build political consensus on the importance of fossil fuel subsidy reform.”
Yet these commitments have scarcely moved the needle. A major study of 157 countries between 2003 and 2015 found that governments “collectively made little or no progress” toward reducing subsidies. In fact, the OECD found that total global subsidies nearly doubled in both 2021 and 2022.
So why are fossil fuel subsidies hard to eliminate?
There are various reasons fossil fuel subsidies are hard to eliminate. Many subsidies directly affect the costs that fossil fuel producers face, so reducing subsidies tends to increase prices for consumers. Because fossil fuels touch nearly every economic sector, rising fuel costs elevate prices for countless goods and services.
Subsidy reform tends to be broadly felt and pervasively inflationary. And unless carefully designed, subsidy reductions can be regressive, forcing low-income residents to spend a larger percentage of their income on energy.
The 2021-22 spike in fossil fuel subsidies is illustrative. After Russia’s invasion of Ukraine, energy prices surged throughout Europe. Governments were quick to provide aid for their citizens, resulting in their largest fossil fuel subsidies ever. Forced to choose between climate goals and affordable energy, Europe overwhelmingly chose the latter.
Of course, economists note that increasing the price of fossil fuels can lower demand, reducing emissions that are driving climate change and harming the environment and human health. Seen in that light, price spikes present an opportunity for reform. As the IMF noted, when prices recede after a surge, it “provide[s] an opportune time to lock in pricing of carbon and local air pollution emissions without necessarily raising energy prices above recently experienced levels.”
Brent crude oil prices have continued to slip, touching 71.74 USD a barrel on Tuesday. This marks a downturn influenced by China’s underwhelming stimulus measures. The market’s lack of confidence in China’s rejuvenation efforts, coupled with persistently weak inflation and subdued energy demand within the country, has led to this downturn.
Compounding the downward pressure on oil prices, the US dollar’s strength makes commodity investments less attractive, as a robust USD typically dampens demand for dollar-priced assets like oil. However, the geopolitical landscape, which often serves as a driver for oil price volatility, appears stable for now. With reduced tensions in the Middle East, some risk premiums previously embedded in Brent prices have been alleviated.
Investors eagerly anticipate the monthly OPEC report expected later today, which is set to provide deeper insights into the supply-demand dynamics. This report has the potential to influence market sentiments significantly and is a key focus for investors as they consider global oil demand forecasts for 2025.
Brent technical analysis
On the H4 chart of Brent, the market continues to develop a broad consolidation range around the level of 73.66, extending to the level of 71.33. Today, we expect a growth link to the level of 73.66. After reaching this level, developing another downside structure to 71.22 is possible. Further, we will consider the probability of the beginning of the growth wave development to 76.00, with the prospect of the trend’s continuation to 80.80, the local target. Technically, this scenario is confirmed by the MACD indicator. Its signal line is under the zero level and is directed downwards.
On the H1 Brent chart, the market has formed a consolidation range around 73.66 and worked out a downward wave to 71.33, the local target. Today, a correction link for this downward wave is likely with a target at 73.66, followed by another wave of decline to 71.22. At this point, the potential of the downward wave can be considered exhausted. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is under 50 and is directed strictly downwards to 20.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Brent crude oil prices climbed above 74 USD per barrel following OPEC+’s announcement to delay its production increase originally scheduled for December. This decision marks the second postponement by OPEC+ amid persistent global economic challenges and aims to avoid potential market oversupply.
Demand prospects remain subdued with Europe’s slow economic recovery and Asia’s lacklustre performance, particularly in China despite recent stimulus efforts. Additionally, tensions in the Middle East, particularly Iran’s continued threats against Israel, are providing strong support to oil prices, with potential escalations anticipated post-US presidential elections on 5 November.
Concerns that regional oil production facilities might be targeted in these attacks contribute to fears of disrupted supply, further buoying oil prices. Meanwhile, temporary weakness in the US dollar also increases oil prices.
Technical analysis of Brent
Brent crude oil prices have rebounded from a recent low of 70.55 and are upward towards 76.16. The market is consolidating around 73.22, with a potential breakout that could lead to the 76.16 level. Once this target is achieved, a pullback to 73.22 could occur before further gains towards 79.20 are pursued. This bullish scenario is supported by MACD indicators suggesting upward momentum.
Following a correction to 73.22, Brent is poised to ascend to 74.90. A successful breach of this level could pave the way to 76.16. The stochastic oscillator’s position above 50, pointing upwards towards 80, corroborates this potential upward movement.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Brent crude oil prices have significantly decreased, reaching 71.46 USD per barrel on Tuesday. Prices fell nearly 6% earlier in the week, marking the most prominent daily drop in two years. The price reduction reflects the market’s reaction to developments in the Middle East, where the escalation of tensions has somewhat subsided.
Over the weekend, Israel’s measured response to Iran, which notably avoided impacting oil facilities and nuclear sites, substantially lowered the risk premium associated with potential disruptions in oil supplies from the region. Furthermore, Israeli officials expressed willingness to consider a temporary ceasefire in the Gaza Strip in exchange for the release of hostages, which has helped reduce some geopolitical risks that were previously inflating oil prices.
With the immediate threats in the Middle East receding, market focus has shifted back to the underlying weak economic data from China and the ongoing production levels from OPEC members. Additionally, upcoming US employment data will be closely monitored as it may provide further clues about the Federal Reserve’s forthcoming rate decisions. The prevailing expectation is two more rate cuts of 25 basis points each before the year ends, a scenario generally supportive of the energy sector. However, much of this has already been priced into the market.
Technical analysis of Brent
Brent crude is currently developing a corrective pattern targeting the 70.55 USD level. If this level is reached, the market may anticipate a rebound towards 75.75 USD. A breach above this could open up the possibility for a rally towards 80.90 USD, with further prospects to reach as high as 85.85 USD. The MACD indicator supports this bullish outlook, as its signal line is positioned below zero, indicating potential for an upward movement.
On the hourly chart, Brent is finalising a correction to 70.50 USD, currently forming the fifth wave of this corrective phase. Once the target of 70.50 USD is achieved, expectations shift towards a new growth wave, aiming for 73.23 USD as the initial target. This bullish Brent forecast is corroborated by the Stochastic oscillator, with its signal line poised below 20, suggesting a pending upward correction.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Oil benchmarks have been hammered this week, shedding over 6% thanks to potent fundamental forces.
The global commodity stumbled into Monday’s session after China’s highly anticipated Finance Ministry briefing failed to impress investors.
OPEC’s monthly oil market report rubbed salt into the wound as the cartel cut its demand forecast this year for the third time in a row.
But the knockout blow for oil was delivered on Tuesday morning following reports that Israel may avoid striking Iran’s crude infrastructure.
With this development easing concerns over wider conflict and major supply disruptions, oil was left under the mercy of bears this week:
WTI: -6.6%
Brent: – 6.1%
Despite these heavy losses, oil prices are still up month-to-date and may see more volatility this week due to ongoing developments in China and US rate expectations.
This brings our attention to key US and China data scheduled near the end of the week.
Thursday, October 17th: US retail sales, initial jobless claims, EIA data
Friday, October 18th: China GDP, retail sales, industrial production, home prices
Over the past few weeks, confidence has improved in the US economic outlook thanks to better-than-expected data. If this translates to improving oil demand, the global commodity could receive a boost.
Still, US crude inventories have been rising over the past two weeks raising questions about demand. The latest EIA data on Thursday has the potential to move oil prices.
But it’s all about the data dump from China on Friday which could provide fresh insight into the health of the world’s largest energy consumers. Ultimately, a strong set of figures from China may boost optimism over the demand outlook – supporting oil prices as a result.
Looking at the technicals…
Prices are under intense pressure on the daily charts with Brent respecting a bearish channel.
There have been consistently lower lows and lower highs while the MACD trades to the downside. However, daily support can be seen around the $75.00 level.
Sustained weakness $75,00 could send prices back toward $73,00,$70.80 and $68.80.
Should $73.00 prove reliable support, this could trigger a rebound toward the 21-day SMA at $75.00 and $77.90.