Oil is back at a key level. After a two-legged recovery from May’s lows, Brent crude is now pushing into a heavy resistance zone that traders will be watching closely. Let’s take a look at what’s driving the move and why this area could matter.
Production Lags Behind the Promise
OPEC’s production rose in May, but not by as much as the latest agreement had set out. Output across the twelve members increased by 150,000 barrels per day compared to April, falling short of the 310,000 barrel boost that was planned. Iraq delivered cuts to offset previous overproduction, while Saudi Arabia and the UAE lifted output but came in under their targets. Saudi Arabia made the largest move, but even that fell short of what was expected.
Analysts at Morgan Stanley pointed out that despite higher quotas between March and June, the actual increase in physical supply is hard to detect. They still expect OPEC+ to add around 420,000 barrels per day between June and September, which could start tipping the market into surplus. For now though, with barrels arriving more slowly than planned, prices have remained supported.
Price Meets Confluent Resistance Zone
From a technical standpoint, Brent’s broader trend remains down. The 50-day moving average is still well below the 200-day and both continue to slope lower. After retesting the April lows in May, the market found support and has rallied in two legs—an initial push higher, a pause, and then a second move up. The RSI has climbed along with it but hasn’t yet reached overbought territory.
This recent rally has now brought price into a cluster of resistance levels that carry weight given the backdrop of the downtrend. Structurally, this zone includes the April swing highs, the March swing lows and, looking back further, the September 2024 floor. Adding to the significance is the VWAP anchored to the January highs, which now sits just above.
Traders who favour trend continuation will be paying close attention here. This is the kind of area where bearish setups often form, especially if price begins to stall or reverse with clear patterns. If the downtrend is going to reassert itself, this resistance zone is a likely place for that to happen.
Brent Crude Daily Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Production Lags Behind the Promise
OPEC’s production rose in May, but not by as much as the latest agreement had set out. Output across the twelve members increased by 150,000 barrels per day compared to April, falling short of the 310,000 barrel boost that was planned. Iraq delivered cuts to offset previous overproduction, while Saudi Arabia and the UAE lifted output but came in under their targets. Saudi Arabia made the largest move, but even that fell short of what was expected.
Analysts at Morgan Stanley pointed out that despite higher quotas between March and June, the actual increase in physical supply is hard to detect. They still expect OPEC+ to add around 420,000 barrels per day between June and September, which could start tipping the market into surplus. For now though, with barrels arriving more slowly than planned, prices have remained supported.
Price Meets Confluent Resistance Zone
From a technical standpoint, Brent’s broader trend remains down. The 50-day moving average is still well below the 200-day and both continue to slope lower. After retesting the April lows in May, the market found support and has rallied in two legs—an initial push higher, a pause, and then a second move up. The RSI has climbed along with it but hasn’t yet reached overbought territory.
This recent rally has now brought price into a cluster of resistance levels that carry weight given the backdrop of the downtrend. Structurally, this zone includes the April swing highs, the March swing lows and, looking back further, the September 2024 floor. Adding to the significance is the VWAP anchored to the January highs, which now sits just above.
Traders who favour trend continuation will be paying close attention here. This is the kind of area where bearish setups often form, especially if price begins to stall or reverse with clear patterns. If the downtrend is going to reassert itself, this resistance zone is a likely place for that to happen.
Brent Crude Daily Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.