Brent Oil Forecast: Bullish Break, Eyes $60 Levels

Brent Oil staged a solid rally from the symmetrical triangle support and rose to a high of $58.30. The daily chart shows a bullish symmetrical triangle breakout, which is a continuation pattern, i.e. the rally from the low of $44.54 (June 21 low) is set to resume.

Major news/data

API reported a huge gasoline draw - The American Petroleum Institute (API) reported a huge draw of 5.753 million barrels for the week ending October 20. The big drop in the gasoline stocks overshadowed a small build of 519,000 barrels in oil inventories.

Saudi determined to end oil glut - Saudi Energy Minister Khalid Al-Falih told Reuters: "We are very flexible, we are keeping our options open. We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the five-year average. When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don’t have a return to higher inventories."

He added further: "The intent is to keep our hands on the wheel between now and until we get to a balanced market and beyond, we are not going to do anything that is going to disrupt the path we are on".

Al-Falih's comments indicate the Kingdom is "ready to do whatever it takes" to rebalance the Oil market and are indicating heightened odds of the global output cut deal extension beyond March 2018.

Watch out - The US Energy Information Administration (EIA) report on Oil inventories is scheduled for release at 14:30 GMT today.

Technicals:  Doors opened for $60 levels

Daily chart

Observations

  • Higher lows pattern
  • Bullish symmetrical triangle breakout
  • Major averages - 50-MA, 100-MA, 200-MA all positioned one below the other (indicates long-term bullish outlook)
  • The 14-RSI is rising

View

  • Oil prices look set to test $60 level over the next couple of days. The move could happen today if the US EIA reports a drawdown in US Oil and gasoline inventories.
  • On the downside, only a break below $57.72 (Friday's low) would abort the bullish view on the daily chart.
Posted In: CommoditiesMarketsFXStreet
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