Brent Crude Oil Price Stagnates Amid Global Supply Concerns
The price of Brent crude oil has stagnated this week as investors assess the impact of the closure of the East-to-West pipeline on global supplies. Brent, the global benchmark, was trading at $105.68, slightly below this month’s high of $109.96.
Saudi Arabia Seeks to Boost Supplies Amid Pipeline Closure
Saudi Arabia is considering conducting ship-to-ship transfers near the Gulf of Oman after Iran-backed groups attacked the East-to-West pipeline last week, a move that will reduce oil supplies by over 7 million barrels in the foreseeable future. The country has committed to repairing the pipeline and the terminals in the shortest time possible.
However, the reality is that the situation is more complicated than officials are implying. For one, even after repairs, the terminal may come under attack again. Moreover, President Donald Trump has warned that the US-Iran war will end after the midterm elections in November, which means that the Strait of Hormuz will continue to be closed by Iran and the US, affecting millions of barrels of oil.
China’s Oil Demand Rises Amid Global Supply Concerns
There are signs that China’s oil demand is starting to rise. Analysts estimate that China’s oil imports will rise by over 1.2 million barrels a day in the fourth quarter of the year, leading to a squeeze. This dynamic explains why top analysts are warning of an oil price surge.
Brent Crude Oil Price Technical Analysis
The daily chart shows that Brent crude oil price has rebounded in the past few months. It has jumped from $70.21 in July to the current $105.87. This rally happened as odds that the US-Iran war will end soon fell. Brent recently crossed the important resistance level of $101.87, its highest level on July 23rd. It has remained above the 50-day and 200-day Exponential Moving Averages (EMA). Remaining above these averages is a sign that bulls remain in control.
Most importantly, oil has formed a bullish pennant pattern, which is made up of a vertical line and a symmetrical triangle. Therefore, the most likely scenario is that it continues rising as bulls target the key resistance level of $110. A move above that level will point to more gains towards $120.
Original Article: Brent crude oil price has stagnated: Is it a calm before the storm? — Invezz