Brent Oil Forecast: Bulls Losing Grip?

Despite having staged a sharp recovery from $54.95 earlier this month, Oil bulls failed to push Brent to 2017 high of $58.85. The bullish move ran out of steam around $58.00 levels last week. Currently, Brent is trading on the back foot around $57.10/barrel.

The decline seen today contradicts the bullish data-

• Iraqi Oil supplies have dropped more than 200,000 barrels per day (bpd) this month, as shipments from both the north and the south of the country declined.

So far, this month the news flow has been positive - tighter US market, fears of supply disruption in the middle east, talk of global output cut deal extension beyond March 2018.

Still, prices have failed to revisit 2017 high of $58.85. It could be a sign that the bulls are losing grip. The technical charts are starting to look heavy as well.

Daily chart

The above chart shows:

• Higher lows marked by black and red line
• Symmetrical triangle (marked by red lines)
• The RSI is turning lower, while the MFI (money flow index) is gaining altitude
• Bearish 5-DMA and 10-DMA crossover almost confirmed

Daily bias - bearish

• Oil is likely to breach symmetrical support and drop to rising trend line support seen around $55.90.
• Only an end-of-the-day close below $55.90 would signal a short-term bullish-to-bearish trend change.
• Given, the money flow index is gaining altitude, a rebound from symmetrical triangle support or $55.90 cannot be ruled out
• On the higher side, a bullish break of the symmetrical triangle pattern would open up upside towards $60.00 levels.