Brent crude oil price has been surging for the past few weeks. The major reason behind this surge is the production cuts by OPEC+ which are expected to offset the decline in demand. Brent oil price is up 22.7% since the announcement from the major oil producers. While most analysts are predicting a $100 Brent crude price, our analysis shows that there are more factors at play.
The rebound in DXY Index is keeping oil prices in check this week. This week started with a 0.51% bounce in the dollar strength index. Consequently, Brent crude showed weakness and closed the first trading session of the week with a 1.06% loss.
Brent Oil Rebounds As Chinese GDP Thrives
China is the largest importer of crude oil in the world. The latest economic data from the 2nd largest economy of the world reveals that the country’s Q1 GDP rose by 4.5% on a YoY basis which was slightly faster than expected. The recovery in the Chinese economy points toward an increase in demand in the coming months.
On Tuesday, Brent crude oil price was trading 0.17% higher after a boost from Chinese economic data. Nevertheless, things are not all good across the Pacific, as the recently released FOMC minutes suggest that a mild recession is likely to hit later this year. The increased cost of lending and the banking crisis could be the major catalysts for the economic slowdown.
Brent Crude Oil Price Hits Resistance
Oil prices have been surging for four consecutive weeks now. After a major drop in March, the price is currently 22.7%, up from the lows. However, technical analysis shows that the ongoing rally is already overextended, and a pullback is almost due. There are multiple confluences on the chart that point toward a correction.
Brent oil price per barrel is currently retesting its $86.5 resistance which has resulted in many rejections in the past. Brent crude oil price prediction also depends on a reclaim of the 200 MA, which lies at $88.91 and acts as another resistance on the daily chart Therefore, there is a high likelihood of a pullback from the current price in the coming days. Only a weekly closure above $88.91 can validate the $100 oi price prediction.
In the meantime, I’ll keep sharing my Brent crude price outlook in my free Telegram channel that you’re welcome to join.
