Brent crude stabilizes around $81.50 on demand optimism

held at $81.50 a barrel on Tuesday after a significant rise of more than 2.5% the previous day. The price increase was driven by optimistic market expectations for fuel demand next summer and news that the US government is seizing the opportunity to replenish its strategic oil reserves at relatively low prices, with a particular focus on oil at the price of about $79 per barrel.

As the US Federal Reserve meeting begins today, caution is expected in the market. Recent robust May US employment data suggests the Fed may keep monetary policy tight longer than anticipated. This potential policy shift could dampen the outlook for U.S. economic growth and hurt energy demand, making the Fed’s upcoming statements highly significant for the oil market.

In addition, market participants are eagerly awaiting the release of the American Petroleum Institute (API) and petroleum product inventories report today and the similar report from the Department of Energy on Wednesday. These data, along with monthly market reports from the Energy Information Administration (EIA), OPEC and the International Energy Agency (IEA) later in the week, could further influence oil price dynamics.

Brent Technical Analysis

On the H4 chart, Brent completed the initial rally at 81.79. A consolidation range is currently expected to form below this level. Should there be a downside breakout, a correction towards 79.30 could occur, followed by a potential new wave of growth targeting 83.30. A break above this level could open the way to 87.50, the local uptrend target. The MACD indicator supports this bullish scenario, with the signal line below zero but sharply pointing upwards.

On the H1 chart, after reaching 81.79, Brent is forming a consolidation range below this level. A bearish exit could initiate a decline to 80.50 and further breach of this level could extend the correction to 79.30. Upon reaching this level, an upward move to 81.80 is anticipated, which may lead to a further rise towards 83.30. This scenario is technically supported by the Stochastic Oscillator, indicating a potential upside move as its signal line is currently at 20.

Market Outlook

As investors navigate a week full of significant data and central bank meetings, Brent crude oil prices are likely to see volatility. The outcome of the US Federal Reserve’s deliberations will be particularly critical given its potential implications for economic activity and energy demand. In addition, inventory data and global market reports from major energy agencies will provide additional clues about supply and demand trends that could either support current price levels or lead to further adjustments.

By the RoboForex analysis department

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.