Following yesterday’s correction, Brent crude has resumed the ascent and targets the recent highs once again as the price received a local psychological support in the $77 area on Monday. The immediate upside target comes at $78, and a break above will open the way to $80.
The reason behind the rebound were the reports that Libya’s National Oil Corporation declared force majeure on substantial volumes of its supply from two major ports, resulting in total production losses of 850,000 bpd. This adds to market concerns over global supply shortage and adds to the bullish pressure on prices.On the other hand, OPEC production increase continues to drag on the markets. Against this background, traders will pay close attention to US inventory and production data this week. Should the stockpiles continue to decline, Brent will receive the additional impetus amid the lingering supply concerns. In the best case scenario, prices will retest the $74.50 and will challenge the key $80 level. However, Brent will need additional support for a sustained break above this psychological mark.
By Helen Rush
Senior Analyst at Capital Markets