Bullish Brent crude oil price predictions have been reignited following the third day of gains this Tuesday. Crude oil price on the Brent benchmark is up 1.49% after the Energy Information Administration reported Monday that US energy production slumped by record amounts in 2020 due to the COVID-19 pandemic.
US crude oil production within this time dropped by 8% in 2020, a record slump as lower demand for gasoline and other transportation fuels due to lockdowns and staff sickness from COVID hurt the industry. Other energy sources such as coal and natural gas also saw significant drops in production.
Also seen to support crude oil prices was the reported suspension of crude oil flow through the Druzhba pipeline by Russia. According to Reuters, Russia has cut off oil exports from the southern link of this pipeline which runs towards parts of Eastern Europe, due to transit payment challenges. Russia pays transit charges to countries where its pipelines pass through. In this case, it is said that the payment from Russian pipeline operator Transneft to its Ukrainian counterpart failed.
Transneft says that oil exports from the northern end of the pipeline, which supplies western Europe, were not impacted by the stoppage. The situation has briefly boosted Brent crude oil price predictions as the asset looks to end the day higher.
Brent Crude Oil Price Prediction
The recent bounce on the lower edge of the falling wedge could point to an end in the recent correction if the price action breaks the 97.40 (15 March and 11 April lows) and 100.92 resistance barriers. Clearance of the psychological mark puts the bulls in confrontation with barriers formed by the wedge’s upper border and the 106.11 resistance (9 March and 19 May low).
Successful clearance of these barriers completes the pattern’s evolution, which makes the 120.00 psychological resistance and the location of the 10 June low/29 June high the target for the measured move’s completion. Attainment of this point requires the bulls to uncap the barriers at 108.99 (16 May low and 28 July high) and 114.03 (5 May and 4 July high).
This outlook is invalidated if the bears resist the attempts to clear the 97.40 resistance, leading to a breakdown of the 14 July low at 94.50 and the wedge’s lower border. This scenario would see 91.32 becoming the immediate downside target (16 February low), with 86.72 (25 January 2022 low) and 80.22 (17 November 2021 and 6 January 2022 lows) forming additional harvest points for the bears.