Brent Oil Struggles for Direction as Glut Concerns Persist
Brent oil is having a tough time in deciding which way to go as traders are worried production freeze by major producers will not be enough to counter excess supply situation.
Hovers around $41.40
Prices are trading around $41.40; largely unchanged on the day. The rise in US rig count number showed by Baker Hughes report on Friday reminded markets about the supply glut issue. Moreover, the data indicated that oil rigs do not expect prices to rise further and thus are utilizing the current spike to hit market with more supply.
Consequently, markets are worried the pickup in China’s imports and possible production freeze accord between major OPEC and non-OPEC producers will not be enough to counter excess supply.
Brent Technical Levels
The immediate hurdle is seen at 42.19 (Aug 24 low) followed by a resistance at 43.13 (Nov 16 low). A break higher would expose 44.00 (psychological hurdle). On the other hand, a break below support at 40.78 (50% Fibo of Jan low-Mar high) would expose 39.50 (trend line support) and 38.05 (100-DMA).
(Market News Provided by FXstreet)
