Oil Prices Forecast: Key Supply Zone and Potential Downtrend
This week, oil prices are poised to make a move towards the supply zone between $84.14 and $84.50 per barrel. However, this level is likely to pose significant resistance, making it challenging for prices to sustain an upward trajectory. Here’s a detailed outlook based on current market dynamics and my trading strategy.
OPEC+ Production Cuts and Market Impact
Early June saw OPEC+ extend its 3.66 million barrels per day (bpd) production cuts to the end of 2025. Additionally, another 2.2 million bpd cut was announced, extending to the end of September 2024. Together, these cuts comprise around 5-6% of global oil demand. Despite these measures, Brent oil prices have struggled to break the key $90 per barrel level since last September. This signals that even with significant production cuts, the market faces substantial resistance to higher prices.
Saudi Arabia and Russia's Fiscal Challenges
The two major players in the OPEC+ alliance, Saudi Arabia and Russia, are under considerable fiscal pressure. Saudi Arabia, in particular, has a fiscal breakeven oil price of $96.17 per barrel, and it is battling a projected budget deficit this year. This financial strain is exacerbated by historical overspending on social and infrastructure projects, as well as hefty dividend commitments from the Aramco IPO.
Technical Analysis: Supply Zone Resistance
With oil prices heading towards the supply zone of $84.14 to $84.50, traders should be prepared for potential selling opportunities. At this zone, prices are expected to encounter strong resistance, making it a critical area to monitor for reversals.
Trading Strategy: Short Positions and Downtrend Potential
In my trading strategy, I will be looking for new supply zones on the 5-minute timeframe within the $84.14 to $84.50 range. This short-term analysis will help identify precise entry points for short positions. Given the anticipated resistance at this supply zone, a significant push to the downside is expected.
Targeting 180 Ticks Downside Move
If we catch the right move, there is potential to capture at least 180 ticks to the downside. The substantial fiscal pressures on major oil producers, combined with the technical resistance in the supply zone, support a bearish outlook once prices reach this level.
Conclusion
This week, watch for oil prices to test the supply zone between $84.14 and $84.50 per barrel. Prepare for potential short-selling opportunities in this range, as resistance is likely to trigger a substantial downward move. By leveraging short-term supply zone analysis, traders can position themselves to benefit from an anticipated decline, potentially capturing significant downside ticks.
Stay tuned to market developments and adjust your strategies accordingly to make the most of these trading opportunities.
OPEC+ Production Cuts and Market Impact
Early June saw OPEC+ extend its 3.66 million barrels per day (bpd) production cuts to the end of 2025. Additionally, another 2.2 million bpd cut was announced, extending to the end of September 2024. Together, these cuts comprise around 5-6% of global oil demand. Despite these measures, Brent oil prices have struggled to break the key $90 per barrel level since last September. This signals that even with significant production cuts, the market faces substantial resistance to higher prices.
Saudi Arabia and Russia's Fiscal Challenges
The two major players in the OPEC+ alliance, Saudi Arabia and Russia, are under considerable fiscal pressure. Saudi Arabia, in particular, has a fiscal breakeven oil price of $96.17 per barrel, and it is battling a projected budget deficit this year. This financial strain is exacerbated by historical overspending on social and infrastructure projects, as well as hefty dividend commitments from the Aramco IPO.
Technical Analysis: Supply Zone Resistance
With oil prices heading towards the supply zone of $84.14 to $84.50, traders should be prepared for potential selling opportunities. At this zone, prices are expected to encounter strong resistance, making it a critical area to monitor for reversals.
Trading Strategy: Short Positions and Downtrend Potential
In my trading strategy, I will be looking for new supply zones on the 5-minute timeframe within the $84.14 to $84.50 range. This short-term analysis will help identify precise entry points for short positions. Given the anticipated resistance at this supply zone, a significant push to the downside is expected.
Targeting 180 Ticks Downside Move
If we catch the right move, there is potential to capture at least 180 ticks to the downside. The substantial fiscal pressures on major oil producers, combined with the technical resistance in the supply zone, support a bearish outlook once prices reach this level.
Conclusion
This week, watch for oil prices to test the supply zone between $84.14 and $84.50 per barrel. Prepare for potential short-selling opportunities in this range, as resistance is likely to trigger a substantial downward move. By leveraging short-term supply zone analysis, traders can position themselves to benefit from an anticipated decline, potentially capturing significant downside ticks.
Stay tuned to market developments and adjust your strategies accordingly to make the most of these trading opportunities.
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