Oil Price: Brent Crude looks to gain further supply risks

• Crude oil prices start the week on top, up 0.94% at the time of writing.
• Geopolitics, supply risks and summer holidays keep buyers hopeful.
• MA crossover and support rejection indicate new highs this week.

Fundamental overview

Benchmark oil trades higher to start the week as supply risks were helped by a weaker US dollar. The ongoing shadow of Middle East tensions continues to hang over markets and particularly oil markets, with ship attacks in the Red Sea adding to supply risks. an impressive delay.

Expectations have risen in recent weeks about the potential for tight oil supply balances in Q3 as OPEC+ maintains production cuts. Geopolitical risk has also added a premium to oil prices of late, and with each day that tensions continue to rise, we can expect the premium to rise as well.

The heat wave experienced in some parts of the world as well as summer vacations have boosted demand expectations. This follows reports from some airlines that travel has returned to pre-pandemic levels and is set to increase over the holiday period. This has raised concerns in some quarters that oil stocks could come under pressure as the summer progresses, with Chinese data pointing in a similar direction. The National Bureau of Statistics (NBS) data released from China last week also showed a slowdown in refinery output of around 1.8% from last year, and could be another factor in the resurgence of oil prices.

Next week

Looking ahead to the rest of the week, markets will focus on the global growth picture before US PCE data is released on Friday. US PCE data is considered the Fed’s preferred inflation gauge. A sustained slowdown in PCE data could add to the weakness of the US dollar and help support oil prices.

Before those dates, we have all the familiar API and EiA inventory releases on Tuesday and Thursday, respectively. It will be interesting to watch this data as we head into the summer for any signs of a significant drop in stocks. .

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Brent Crude Technical Outlook

The technical chart for Brent crude oil is intriguing as the price has been in a range since the middle of last week. A bearish weekend, but oil prices held firm above key support around 84.70.

The MA crossover (crossing the 100-day MA over the 200-day MA) is another sign of bullish momentum in play. Today’s weaker US dollar helped crude oil prices rise towards the immediate resistance level (last week’s highs) at 86.213, with a break above opening a retest of the resistance area around the 87.90 handle.

Alternatively, a rejection of 86.213 could open a pullback to 84.70 and the moving averages to rest just below. This would be a difficult area of ​​support to breach given the number of confluences present. If by chance the price breaks the MA, the next area of ​​interest is the 83.00 handle.

Brent Crude Oil Daily Chart, June 24, 2024

Source: TradingView.com (click to enlarge)

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