Brent oil hits two-month high amid geopolitical tensions

By the RoboForex analysis department

Brent crude oil prices rose to $86 a barrel on Tuesday, marking the highest level in two months. This increase was driven by escalating geopolitical risks in Eastern Europe and the Middle East, particularly the ongoing confrontation between Israel and Hamas, which shows no sign of abating despite the involvement of US-backed international mediators.

On the demand side, uncertainties persist. China, the world’s largest oil importer, continues to face significant economic challenges, contributing to volatile market sentiment. China’s retail sector is under pressure following disappointing mid-year online sales results, with Chinese consumers reluctant to spend amid worries about personal wealth, the ongoing housing crisis, delayed wages and high unemployment of young people. These factors are critical because they jeopardize China’s GDP growth target of around 5% for the year.

Brent Technical Analysis

On the H4 chart, Brent is currently advancing towards the $86.50 level, which is identified as an immediate target. Once this level is reached, a potential correction to $81.60 may occur, testing the top. Thereafter, the market could initiate a new bullish wave targeting $89.00 with the potential to extend to $94.00. This bullish outlook is supported by the MACD indicator, whose signal line is above zero and rising steeply.

On the H1 chart, Brent found support at $84.00 and is now progressing through the latter stages of the current bullish wave. The market has already touched the $85.24 level. We anticipate the formation of a narrow consolidation range around this level, with a breakout above that may lead to further upside towards $86.50. This scenario is technically reinforced by the stochastic oscillator with its signal line positioned above 20 and preparing for a rise to 80.

Market Outlook

Investors should closely monitor developments in geopolitical hotspots and economic indicators in major economies such as China and the US, as they could significantly influence oil prices. The current trajectory suggests bullish momentum for Brent crude, but the volatile nature of geopolitical events and economic data releases warrants cautious optimism.

Disclaimer

Any forecast contained herein is based on the author’s own opinion. This analysis cannot be treated as trading advice. RoboForex assumes no responsibility for trading results based on trading recommendations and reviews contained herein.

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