Brent Oil outlook: Brent price rises strongly on renewed tensions and growing supply fears

Slobodan Drvenica Windsor Brokers

Brent Oil

Brent price jumped over 4% and hit the two-week high on Thursday, following further escalation in the Middle East and hurricane that cut US oil and gas production.

Growing supply worries over the strongest attacks on ships in the Gulf and Strait of Hormuz (compared to Wednesday’s news that 81% of oil flow through Hormuz has been recovered from the pre-war period), while a number of US oil installation have been shut down due to bad weather, lifted the oil prices.

Escalation of the conflict in Yemen, with Syria signaling that they may provide help to its ally Saudi Arabia (also being involved in conflict), as well as latest signals that US and Israel are ready to attack Iran again (waiting for final approval of President Trump), adds to deteriorating picture.

Oil price jumped above $105 per barrel for the first time since Sep 25) to retrace over 61.8% of $109.77/$95.11 drop, with break above former recovery top of Oct 1 ($103.95), generating bullish continuation signal of recovery leg from $95.11.

Technical picture on daily chart improved further (following repeated rejection at bull-trendline support which signaled that larger bulls remain in play), while the latest rise brought DMAs into full bullish configuration and 14-momentum emerging into positive territory.

Improving technicals contribute to favorable fundamentals, keeping near-term focus at the upside.

Sustained break of $103.95 is needed to confirm signal and keep the price in upward trajectory for attack at initial target at $106.31 (Fibo 76.4%), guarding $108.22 (Sep 24 lower top) and key $110 resistance zone, where several attacks in September failed.

Res: 105.46; 106.31; 108.22; 109.40.
Sup: 103.37; 102.44; 101.98; 100.76.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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