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FxWirePro: Target for Brent revised higher to $74 per barrel

Bulls in charge.

  • Earlier this week, we warned that bulls might be taking a breather, as the price of oil has been consolidating in a tight range; both North American benchmark WTI (57.7-54.5), and global benchmark Brent (67.7-64.2)
  • Both Brent and WTI have cleared the hurdles and trading above the range; WTI at $58.2 per barrel and Brent at $9.5 per barrel premium to WTI.

The oil price has been struggling to make gains,

  • It remains trapped between global economic slowdown exerting bearish pressure, and OPEC/N-OPEC supply cuts giving the bulls an edge.
  • In addition to that OPEC/N-OPEC supply put is also countered by Donald Trump’s tweeter assault on oil bulls.
  • However, the oil market remains in backwardation; cash price is trading at $0.27 per barrel premium for WTI and at $0.17 per barrel for Brent.
  • Moreover, the commitment of traders (CoT) report shows that speculators like money managers and hedge funds have been increasing long positions in WTI. Since February, Net speculative positions have increased by more than 60,000 contracts.

Recently, OPEC members have toughened their hawkish rhetoric on supply cuts, trying to push prices higher.

Trade idea:

  • We suggested maintaining long positions in Brent crude with a target of $71.5 per barrel and stop loss around $64 per barrel. Brent crude is currently trading at $66.9 per barrel.
  • However, our latest calculations suggest that price is likely to move even higher around $74 per barrel.

 

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