FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
Markets.com information and reviews
FxPro information and reviews

Brent: too high, too fast

15 February 2021

Brent prices surpassed the $63 mark in early trading on Monday, bringing this month’s growth to 15%. Middle East geopolitical tensions drove the latest impulse. The Saudi-led coalition in Yemen said it had intercepted a drone of the Iranian-backed Husit group. Differences between Iran and Saudi Arabia have faded in recent months due to a coordinated effort to maintain oil prices.

Brent’s impulsive reaction has been attributed to fears of supply disruption. But what if there should be fears of a renewed struggle for market share? In that case, there would be fewer and fewer supporters of hard quotas in OPEC+.

In August 2019, an attack on Saudi Aramco’s refining capacity caused a 12% jump in prices. However, less than three weeks later, they sank even lower as the falling output was compensated from inventories, and the confrontation did not intensify.

Something similar might happen this time as well. A side effect of rising prices is re-established frictions between the frenemies in the cartel. The same risks are represented by Russia’s increasing pressure, which has already started to promote the idea of normalizing production volumes when Brent is approaching $50. Since August, US shale producers have long since shifted from expectation to action, increasing the number of oil rigs last week by 78%.

Brent is currently worth about as much as it was at the end of January 2020, when reports of coronavirus in China began to have a visible effect on the market. The price level has thus already fully recovered. Simultaneously, production volumes are about 10% lower than a year ago, as there is usually 4-9 months between drilling and supply.

Oil has risen too high too fast and could considerably slow down further global recovery. Therefore, it is in the interest of the big oil demanding countries (including the US) not to force a transition to new energy, but to be on the “cheap fuel” side.

The strong oil price impulse is also confirmed by the extremely high RSI, which now rises to 80 on daily charts. The last time the RSI was so high was in February 2012 when Brent reached $125 but then gradually lost its growing momentum and, after a month of hovering, turned back to decline and not did reach those values again. It is unlikely that the outcome will be as dramatic this time. However, a correction from the $63-$65 area is imminent and could be quite deep and painful for short-term traders.



US Markets lost major support, Asian Indices are melting
US Markets lost major support, Asian Indices are melting

Global markets closed last week on the back foot, and no significant positive factors emerged in Asian trading, increasing the flight to safety. The Hang Seng lost...

20 Sep 2021

US Retail sales and other data has supported Dollar
US Retail sales and other data has supported Dollar

The US Retail sales notably exceeded expectations, adding 0.7% in August vs an expected 0.7% decline. The increase to August last year is an impressive 14.9%...

17 Sep 2021

Geopolitics Fire Up Up and Cryptos Are Booming
Geopolitics Fire Up Up and Cryptos Are Booming

Futures in the United States and Europe are trading lower today as investors are worried about the new security agreement between the U.S., the U.K. and Australia...

16 Sep 2021

UK inflation surges, stocks struggle
UK inflation surges, stocks struggle

European markets flat at the open this morning as UK inflation surged to a record high in August and Chinese economic data was soft. China’s retail sales fell to...

15 Sep 2021

Gold is anxiously waiting for the US inflation data
Gold is anxiously waiting for the US inflation data

Gold, hovering around $1790 since last Thursday, might take an even harder hit. The bears are waiting for a good signal to launch an attack. It is now holding it below significant levels...

14 Sep 2021

Here Is Why Stock Futures Are Trading Lower
Here Is Why Stock Futures Are Trading Lower

Despite a week of doom and gloom in the stock markets, futures in the United States are still trading lower. Since February, the S&P 500 has been on its longest...

13 Sep 2021

Editors' Picks

OctaFX information and reviews
HotForex information and reviews
XM information and reviews
FXCM information and reviews
Vantage FX information and reviews
Vantage FX
Moneta Markets information and reviews
Moneta Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.