Market analysts from Société Generale are warning investors of potential risks ahead as Brent crude oil prices show signs of deeper decline. The recent breach below a multi-year ascending trend line indicates a bearish outlook for the commodity.
Potential Drop to $70.00 Per Barrel
According to the analysts, Brent has struggled to reclaim the 50-day moving average (DMA) in its recent rebound attempts. The daily MACD is at a higher level than the previous month, but there are no clear signals of a significant recovery in sight.
The first layer of resistance for Brent crude is near the August trough of $75/75.65. Failure to surpass this level could lead to a continued downward trend towards the December low of $72.30 and potentially even down to $70.00 per barrel. The drop in Brent crude prices below $74 per barrel is seen as disinflationary, especially following reports that OPEC may increase oil supply by 180,000 barrels per day in the coming weeks.
Investors are advised to closely monitor the price movements of Brent crude and consider potential risks associated with further declines in the commodity’s value.