Brent Oil Forecast: Bull Flag Breakout

Brent Oil rallied on Thursday as expected on the back of a bullish price-RSI divergence and an upside break of the triangle pattern. Price jumped to a high of $57.11 and currently trades in a sideways manner around $56.83.

Macro data/news

Tropical storm eyes Gulf of Mexico
Traders are monitoring a tropical storm heading for the Gulf of Mexico.

Per a Reuters report, "the Louisiana Offshore Oil Port, one of the most important fuel handling facilities in the Gulf of Mexico, has suspended vessel offloading operations. Storm Nate, which the US National Hurricane Center said could intensify into a hurricane, is off the coast of Nicaragua, heading into a region of the Gulf populated by offshore oil platforms that pump more than 1.6 million barrels of crude per day (bpd), or about 17 percent of US output."

Iran, Iraq and Turkey block Kurdish exports
According to Rudaw report, Iraq, Iran and Turkey have opened a unified front against Kurdish oil exports after the region elected to seek independence from Baghdad in a referendum in September. Kurdistan produces about 600,000 barrels of oil per day.

US is poised to permanently lift sanctions on Sudan
Rumors are doing the rounds that an announcement is expected as early as Friday.

Focus on-

• Saudi-Russia cooperation
• US oil rig count data scheduled for release in the late US session

Oil prices remain bid this Friday morning in Europe, despite storm threat in the Gulf of Mexico. Technical charts show oil prices could revisit the recent high of $58.85.

4-hour chart

• Bull flag breakout - Continuation pattern, indicates the rally has resumed
• Bullish 5-SMA and 50-SMA crossover
• Bullish 10-SMA and 100-SMA crossover
• Bull flag breakout followed by a nice consolidation [base building] around $56.80

• Oil looks set to test $58.00 levels ahead of the weekend, although it needs to first take out the overnight high of $57.11. A spike to $58.00 though likely as suggested by the 10-day moving average, which is still sloping downwards.  
• On the downside, a break below $56.38 would abort the bullish view on the 4-hours chart.