Brent oil - Technical correction gathers pace, eyes US inventories data

The technical correction in oil prices gathered pace, with Brent contract now attempting a bullish break of the falling channel. 

The front month contract was last seen trading around 45.90/barrel. Prices jumped to a high of $46.19 on Monday after reports hit the wires that Saudi Arabian crude export loadings in April had dropped materially. Saudi exports to US have dropped below one million barrels per day for the first time since last November.

However, the sentiment still remains bearish as the glut still persists and the market isn’t likely to rebalance anytime soon. Oil traders await the weekly US inventory data release. Markets are expecting a 4.5 million drop in oil supply and a 3 million drop in the gasoline inventories. 

Brent Technical Levels

The 4-hour chart shows the prices are attempting a bullish break of the falling channel. The RSI has turned bullish and is sloping upwards, pointing to scope for further gains in oil prices. A break above $46.19 (previous day’s high) would expose $46.68 (May 5 low) and $47.00 (zero levels). On the other hand, a break below $45.43 (June 20 low) would open doors for $45.01 (previous day’s low) and $44.34 (June 21 low).