Brent Crude Oil Hits New Heights Amid Supply Concerns

The international benchmark for oil prices, Brent crude, has notably escalated in its price per barrel, soaring to levels not seen since the early days of November 2023. Presently, the price hovers around an impressive USD 87.00 per barrel. The thrust in Brent crude's value can be attributed to apprehensions among investors regarding the stability of supply, influenced primarily by geopolitical tensions in key oil-producing nations. These tensions have led to the market pricing in the risk of potential disruptions in oil supply.

Impact of Supply Adjustments

Contributing to the upward pressure on oil prices, Iraq has recently proclaimed a slashing of its crude oil exports to 3.300 million barrels per day as a step to align with the quotas set by OPEC+. This decision marks the second month in a row that the country has reduced its oil exports. In tandem, Saudi Arabia's oil exports witnessed a slight drop to 6.297 million barrels per day from the previous figures of 6.308 million.

Global Demand and Economic Indicators

Despite these adjustments in supply, the global demand for energy remains robust. Indications from China - one of the largest consumers of oil - suggest strong performance in the retail sales and industrial production sectors. These indicators give a stable outlook for oil demand throughout the current year.

The US Dollar's Influence

An important factor to consider in the price of oil is the performance of the US dollar. Recently, the dollar has experienced a five-session rally, reaching a two-week peak compared to its major rivals. As oil trades in dollars, a stronger US currency could make the commodity more expensive for investors using other currencies, potentially impeding oil's current rally.

Aviation Fuel Market Projections

With the summer season on the horizon, there is usually an increase in demand for aviation fuel. However, current projections reflect a lack of confidence, with expectations of a 5-6% price increase for aviation fuel, potentially reaching USD 111.00 per barrel in Q3 2024. Nonetheless, the number of flights has not significantly increased due to the prevailing economic challenges, which could exert downward pressure on the market and the prices of aviation fuel.

Technical Analysis Outlook

Technical analysis on the H4 Brent chart suggests a consolidation range around 84.33, with a breakout above to 86.60. A subsequent decline to 85.70 is possible, which could be followed by a new hike aiming at 87.87, a local target. A minor correction to 84.33 might be seen before another climb to 88.48 as the next goal. On the H1 chart, predictions show a growing trend towards 88.00 as a local target, after which a slight decline to 84.40 is anticipated before continuing the upward trajectory to 88.50.

Brent, Oil, Prices