Brent Oil Forecast: Potential Bullish RSI Divergence, Eyes $56.50

Brent's rebound from $55.45 ran out of steam at $56.31 yesterday after the American Petroleum Institute (API) reported a large gasoline build. Prices printed a fresh two-week low of $55.31 today.

The API reported a draw of 4.079 million barrels in United States Crude Oil inventories. The bullish Oil inventory data could do little to boost prices as gasoline inventories rose by 4.19 million barrels for the week ending September 29. Last week also saw a large gasoline build.

The decline in Brent was also due to heightened fears that the current output cut deal, set to expire in March 2018, won't be enough to rebalance the Oil markets.

Despite the bearish newsflow, Brent is still holding on to the 23.6% Fib retracement support of $55.47.

Technicals - Potential bullish RSI divergence on the 4-hour chart

Observations

• Bears struggling to keep prices below the 23.6% Fib support
• Falling channel intact
• Oversold RSI
• Potential bullish price RSI divergence

View

• Brent Oil is more likely to revisit $56.50 levels over the next 24 hours.
• On a larger scheme of things, only an upside break of the falling channel would signal a continuation of the rally from the June 21 low of $44.54.
• On the downside, an end of the day close below $55.47 could yield a drop to $54.67 [Sep 18 low].