Brent crude oil price forecast: what is the path of the least resistance?

November 13, 2024 01:28 PM PST | By Invezz

Brent crude oil price forecast: what is the path of the least resistance? — Image source: Invezz

China’s stimulus hopes

Last week, investors were particularly keen on the US presidential elections and the National People’s Congress (NPC) standing committee meeting. In regards to the latter, those in the commodities market hoped that the subsequent announcement would boost optimism over China’s demand for crude oil and industrial metals.

However, just like in the case of the latest briefings by the Finance Ministry and NDRC, the announcement by NPC committee fell short of investors’ expectations. In the new stimulus measures, the committee did not highlight concrete details especially on how to improve private spending.

Amid the sluggish Chinese economy, OPEC lowered its projections for the country’s oil demand growth for both 2024 and 2025. In its November report, the organization of petroleum exporting countries cut its forecast for China’s demand growth from 580,000 barrels per day (bpd) last month to 450,000 bpd. Besides, it expects the country’s oil demand in 2025 to be at 310,000 bdp; a downward revision from its projection of 410,000 in October.

US Dollar index surges

The US dollar index has extended its previous gains as it continues to benefit from the Trump win; further exerting pressure on crude oil prices. As is the case with other dollar-priced assets, a stronger greenback makes the commodity more expensive for buyers holding foreign currencies.

During Wednesday’s early trade, the dollar index, which measures the value of the greenback against a basket of six other major currencies, rose to a six month high at $105.88 before pulling back slightly to $105.64 as at the time of writing. Investors are betting that Trump’s aggressive trade practices and policies will boost the US dollar while weighing on other currencies like the euro.

During his campaigns, Trump warned that the euro bloc will “pay a big price” for failing to purchase enough American exports. Besides, he threatened to impose blanket tariffs of 60% on China’s exports to the US.

Additionally, the dollar has found additional support from the Fed’s latest interest rate decision. While announcing a cut of 25 basis points, the central bank failed to offer clear guidance on the speed and timing of further rate cuts. Investors are lowering their bets of another cut during the Fed’s December meeting.

Soft Demand Growth Outlook

On Wednesday, crude oil prices reversed some of their previous losses even as they remained close to the one-month low hit in late October. The rebound was largely due to the commodity’s near term tightness.

In a note, ANZ analysts indicated that buyers in crude oil’s physical market have been particularly active. This means that any available cargo is quickly taken off the market; boosting prices.

Even so, a soft demand outlook and oversupply concerns continue to weigh on the prices. In addition to the lower projections on Chinese oil demand, the OPEC monthly report released on Tuesday further cast a bearish shadow on crude oil prices. In the report, the group lowered its forecast for 2024’s global oil demand growth. At the same time, its projection for 2025 came in lower; marking the fourth downward revision in a row.

In the closely watched report, OPEC now sees global oil demand growing by 1.82 million bpd in 2024. This is a decline of 107,000 bpd from last month’s report. It also lowered its projections for 2025’s global oil demand growth by 103,000 from its October report. The soft outlook on China’s demand growth largely contributed to this revision.

Brent crude oil price forecast

The daily chart shows that the Brent crude oil has continued its strong downtrend after Trump won the election. It has dropped below the 23.6% Fibonacci Retracement level. It has also remained below all moving averages, while oscillators have pointed downwards.

Therefore, the path of the least resistance for the price of crude oil is bearish, with the next point to watch being at $68. The stop-loss of that trade is at $74.

The post Brent crude oil price forecast: what is the path of the least resistance? appeared first on Invezz

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations, and video (Content) is a service of Kalkine Media LLC., having Delaware File No. 4697309 (“Kalkine Media, we or us”) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.