Oil Prices Drop as OPEC+ Members Plan Production Increase: What to Expect Next
In recent days, oil prices have faced significant selling pressure, dropping to $77.21 per barrel on Tuesday. Despite a slight recovery, market sentiment remains bearish.
Investors are reacting to news from OPEC indicating that 8 OPEC+ members are planning to increase production by 180,000 barrels per day. This increase in supply, coupled with weakening demand indicators from major economies, is casting a shadow over the oil market.
A report from the US Department of Energy highlighted a decrease in oil consumption in June, reaching levels not seen since 2020. This decline in demand is mirrored by troubling economic data from China, where factory activity has hit a six-month low. Additionally, reduced selling prices and new orders from Chinese manufacturing sectors are adding to concerns about future demand.
However, there is some support for oil prices from production issues in Libya, where the largest local oilfield has halted production due to force majeure. This disruption could create supply challenges for major oil consumers and temporarily offset broader negative trends.
Technical Analysis of Brent Crude:
The H4 chart shows a potential growth move towards $79.00, with a possible continuation to $82.87 if the level is breached upward. The MACD indicator supports this bullish scenario.
On the H1 chart, Brent has formed a corrective structure down to $76.02 and is moving towards $77.55. A breach of this level could lead to further growth to $79.00 and potentially to $82.87. The Stochastic oscillator also indicates potential for price increases.
Overall, while short-term technical indicators suggest a possible recovery in Brent prices, the market context remains challenging due to increased supply forecasts and weak demand signals from key global markets.
In conclusion, investors should closely monitor developments in OPEC production, demand trends, and geopolitical factors to make informed decisions about their oil investments. Stay informed and be prepared for potential market fluctuations in the coming days.