The Brent crude oil price has formed a double bottom pattern as investors wait for the upcoming meeting between Joe Biden and Salman of Saudi Arabia. Oil is trading at $113.55, which is about 5.25% above the lowest level last week. This price is also about 18% below the highest level this year. Meanwhile, the WTI oil price is trading at $110, which is higher than June’s low of $101.56.
Oil prices outlook
The Brent crude oil price bounced back even after OPEC+ members announced that they will boost production. The cartel argued that more production was needed now that demand is rising as the world’s economy recovers.
The price is also rising ahead of this month’s meeting between Joe Biden and Crown Prince Salman of Saudi Arabia. In the meeting, Biden is expected to press Salman on the need to pump more oil as he battles low poll numbers.
Meanwhile, crude oil price is also reacting to news that Iran is being forced to discount its prices as it seeks to compete with Russia in China. China has become an important destination for Russian crude now that many western countries are reducing their reliance on the country. Indeed, Russia overtook Saudi Arabia as the biggest oil supplier in China in May. In a note, an analyst told Bloomberg:
“The only competition between Iranian and Russian barrels may end up being in China, which would work entirely to Beijing’s advantage. This is also likely to make the Gulf producers uneasy, seeing their prized markets taken over by heavily discounted crude.”
Meanwhile, crude oil price is reacting to a recent upgrade from JP Morgan. In a note, analysts at the American bank said that the price of oil could soar to $380 a barrel if Russia slashes its output. The measures by G7 to cap the price of Russian oil could lead to a 5 million barrels.
Brent crude oil price forecast
The four-hour chart shows that the crude oil price formed a double-bottom pattern at $108 in June. In price action analysis, this pattern is usually a bullish sign. It has now moved above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved above 50.
Therefore, there is a likelihood that oil prices will keep rising in July as investors target the key resistance at $121. A drop below the support at $108 will invalidate the bullish view.