Brent crude oil price has held steady in the past few days as demand rebounds. It rose to a high of $99, which was the highest point since August. Oil prices have jumped by more than 17% from the lowest level in September. The West Texas Intermediate (WTI) has also staged a strong recovery in the past few weeks.
Oil demand and supply
There are several catalysts for Brent crude oil price. First, OPEC+ recently voted to reduce oil supply sharply in a bid to push prices much higher. The official cuts, coupled with supply challenges in countries like Nigeria, mean that supply challenges could be bigger than expected.
Second, the rising tensions between the United States and Saudi Arabia mean that oil prices could remain in an elevated level. The US has accused Saudi Arabia for partnering with Russia and for paying too much attention to its Chinese relationship.
Third, Brent crude oil price has jumped as the EU prepares to impose import restrictions on Russian oil for its invasion of Ukraine. Most EU countries will be barred from importing oil from the country. While these sanctions are meant to punish Putin, the reality is that he will benefit as prices remain high. Also, since the oil market is an international one, Russian oil will still find its way to Europe.
The next key catalyst for oil prices will be the upcoming mid-term elections. A change in the balance of power in Washington will be positive for the oil and gas sectors. Republicans will likely use their leverage to promote oil investments.
Energy prices have also risen because of the weaker US dollar. The US dollar index has dropped from the year-to-date high of $116 to about $110.
Crude oil price forecast
The four-hour chart shows that the Brent crude oil price has made a strong recovery in the past few days. In this period, it has moved above the 25-day and 50-day moving averages. It has also formed a cup and handle pattern and moved above the standard pivot point.
In price action analysis, a cup and handle pattern is usually a bullish sign. Therefore, Brent will likely continue rising as buyers target the first resistance of the standard pivot point at $101. A drop below the support $97 will invalidate the bullish view.