• Output disruption is temporary
  • 161.8 fe capped the price action

The Brent crude oil failed to gain a footing above the 161.8fe last week triggering a retracement to its 20MA (Weekly) located at $60.90 levels. The daily indicators gave a mixed outlook as the RSI is stabilizing but lacks conviction, whereas the oscillator is remaining bearish.

Support at the 20MA (Weekly) held firmly last week, keeping momentum in favor of the consolidation phase; however, buying the dip favors the intra-week trend. To confirm a change in trend, the price needs to break through $64.70.

On the downside, a break below the $62.30 may trigger losses towards $61.70 before $60.00. This would confirm the gap-filling activity which started last week.

According to the Goldman Sachs analysts Allision Nathan and David Groman despite the significant disruption, Brent oil fair value is close to the mid $60b/bbl.

“Despite the large initial disruption to oil production, the Kingdom’s latest guidance is that production should recover to nearly full capacity by the end of September, and that inventory destocking will limit the impact on export volumes. But even if the outage proves more prolonged than projected, as our chart of the week shows, we think the global oil market has sufficient resources to balance lost.”

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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