Oil prices were supported last weekend by escalating tensions in the Middle East, namely Syria, which underscored weak demand from China.
Analysts are predicting a supply glut next year due to weak demand, despite OPEC+ decision to postpone a production hike and extend significant output cuts until the end of 2026. On Thursday, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, delayed the start of oil production increases for three months until April and extended the full reversal of cuts by a year to the end of 2026.
Lower prices by Saudi Arabia and the extension of the OPEC+ production cut agreement last week underscored weak demand from China, pointing to a possible weakening of the market by the end of the year.
The number of oil and gas rigs deployed in the United States last week reached the highest level since mid-September, pointing to rising output from the world’s biggest crude producer.
From a technical point of view, Brent crude is in a bearish pattern, and breaking through the $71 per barrel is only a matter of time. Now, as noted above, Brent price has received support from geopolitical worries, and is likely to return to the level of 71.8. This mark is the first target. In case of further realization of favorable scenarios for oil prices, the next target is the level of 71.8.
The final recommendation is to buy Brent.
The profit could be fixed at the level of 71.80. The Stop loss could be placed at 70.00.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 1% of your deposit.
