Brent Oil trades on the back foot this Monday morning, courtesy of the broad-based USD strength and overbought technical conditions. Brent prices gained 20% in the third quarter as the forward structure fell into backwardation - signaling a tighter market. Brent rose to $58.85 last month; the highest level since July 2015.
Prices clocked a low of $56.22 and currently trades around $56.50/barrel.
Higher OPEC output puts brakes on the rally
A Reuters survey on Friday found that OPEC oil output rose last month, gaining mostly because of higher supplies from Iraq and also from Libya, an OPEC member exempt from cutting its output. The increased Libyan supplies are likely to be short-lived as the country's largest Oil field Sharara, has been closed since Sunday.
US rig count rises for the first week in seven
Another reason for the decline in Brent could be signs of a rebound in the US output. Drillers added six oil rigs in the week to Sept. 29, bringing the total count up to 750, Baker Hughes data released on Friday showed.
A technical pullback
The pullback from the high of $58.85 appears to be chart-driven. Moreover, the OPEC news and Baker Hughes report triggered a much-awaited technical correction.
Technicals - Bullish exhaustion
Weekly chart
- The 10-DMA is yet to top out. Thus prices are likely to revisit $57.50-58.00 levels. A subsequent failure around $58.00 could yield a pullback to $54.66 [50% Fib R].
- The overall outlook remains constructive as long as the oil bulls are able to defend the rising trendline.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
