Brent touched fresh November 2018 highs yesterday. The price quickly jumped to $80,50 but failed to hold above the psychological $80 threshold and staged a correction which was purely technical by nature. On Friday, crude oil prices are oscillating above $79,50 area and struggle for direction after an aggressive rally.
Traders continue to assess the potential consequences of renewed sanctions on Iran which further supports the bullish background and adds to positive market fundamentals. Current levels look quite justified as global glut has almost gone and concerns over the persistent oversupply turned into fears of a deficit amid the ongoing OPEC efforts, falling Venezuelan production, and the expected cut in Iranian oil exports.
From the technical point of view, Brent looks overbought at current levels. On the other hand, the fact that the bulls dared to challenge the important and strong resistance of $80 highlights the potential for further rise remains. Prices need to return above the psychological barrier to avoid a more substantial profit taking ahead of the weekend.
By Helen Rush
Senior Analyst at Capital Markets