Brent crude made another failed attempt the challenge the $78 immediate resistance which attracts profit-taking this week. Crude oil markets look rather stable in a wider picture, while short-term charts highlight the nervous behavior of traders lately.
One of the reasons behind the mixed dynamics in prices and the lack of bullish impetus are Trump’s tweets on the oil market. This time, the US leader demanded that OPEC reduce prices for crude. The aggressive US pressure on the cartel erodes the incentives for bulls to push oil price higher as there are increasing concerns that the group of producers will intensify their efforts in increasing output on the back of global markets rebalancing.
On the other hand, Brent stays relatively afloat not far from 3.5-year highs due to supply concerns amid the declining production in Venezuela and the upcoming US sanctions on Iranian crude exports.
In the short-term, traders will focus on fresh weekly numbers from EIA. Should the report point to further decline in inventories and the continuing pause in shale production, prices could stage a local recovery and get back above $78. But in a wider picture, Brent remains vulnerable amid the rising OPEC production.
By Helen Rush
Senior Analyst at Capital Markets