Brent Crude oil price started the day with bullish price action as the US reported a more-than-expected decrease in its inventories on Wednesday. However, the price action turned negative as the London session started. Till press time, the commodity had plummeted 0.64% below its previous close.
UKOIL oil remains strong despite a surge in the strength of the dollar. The DXY, which is an index that measures the strength of the dollar against the other global currencies, gained 1% from last week’s low. Brent crude price stands at $93.66 per barrel till press time.
Last week, the US Energy Information Administration reported a 2.2-million-barrel decrease in its oil reserves, which was significantly more than the anticipated 320,000 barrels by analysts. The US Crude futures also saw 943,000 barrels decline and reached its lowest point since July 2022.
Additionally, the voluntary production cut of 1.3 million barrels per day till the end of 2023 by Saudi Arabia and Russia is also in effect. This is tightening the supply of oil in the market. Russia has not lifted its oil export ban and has not announced a crude oil supply increase. These conditions will likely keep the Brent oil price elevated in the coming weeks.
The expectations for oil prices to reach new yearly highs remain high amid a tightening global supply. The chart below shows the price sitting 2.5% below its yearly high. The price is also down 14.6% above the 200 MA, which is a very bullish sign.
There is a strong likelihood that the Brent crude oil price will retest the $97-$100 supply zone in the coming days before suffering a major correction. However, the price prediction will turn bearish if the price breaks below the critical zone of $88-$89.
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This post was last modified on Sep 28, 2023, 15:06 BST 15:06