Brent Crude Oil stabilises around 81.50 USD amid demand optimism

Brent crude oil is holding steady at 81.50 USD per barrel on Tuesday, following a significant surge of over 2.5% the previous day. The price increase was driven by optimistic market expectations about fuel demand this coming 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 priced around 79 USD per barrel.

As the US Federal Reserve meeting commences today, market caution is expected. The recent robust employment data for May from the US suggests that the Fed might maintain a tight monetary policy longer than anticipated. This potential shift in policy could dampen US economic growth prospects and impact energy demand, making the Fed's forthcoming statements highly significant for the oil market.

Additionally, market participants eagerly await the release of the American Petroleum Institute (API) report on crude oil and petroleum product inventories today and the Department of Energy's similar report on Wednesday. These data releases, along with the 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 has completed the initial wave of growth to 81.79. Currently, a consolidation range is expected to form below this level. Should there be a downward breakout, a correction towards 79.30 could occur, followed by a potential new wave of growth aiming for 83.30. Breaking this level could open the pathway to 87.50, the local target of the upward trend. The MACD indicator supports this bullish scenario, with its signal line below zero but directed sharply upwards.

On the H1 chart, after reaching 81.79, Brent is forming a consolidation range beneath this level. A downward exit could initiate a decline to 80.50, and further breaking this level could extend the correction to 79.30. Upon reaching this level, an upward movement to 81.80 is anticipated, potentially leading to further growth towards 83.30. This scenario is technically supported by the Stochastic oscillator, indicating a potential upward movement, as its signal line is currently poised at 20.

Market outlook

As investors navigate a week packed with significant data releases and central bank meetings, Brent crude prices will likely exhibit volatility. The outcome of the US Federal Reserve's deliberations will be particularly pivotal, given its potential implications for economic activity and energy demand. Additionally, inventory data and global market reports from major energy agencies will provide further clues about supply and demand trends, which could either support the current price levels or drive further adjustments.