Brent oil – New pattern established

Brent oil has established a new pattern this week- a minor pullback in Asia followed by a rally in Europe and US session.

This exactly opposite of what we used to see in late July when prices were declining and Asian session mostly saw a pull back before prices resumed fall in Europe and US.

Brent is back above $50/barrel and currently trades around $50.80/barrel. For many, this rally is unsustainable given the fundamentals are not supportive. Gasoline build up during peak driving season in the US is a cause of worry.

Moreover, this is a hope rally…hope that OPEC would announce production freeze at September meeting.

Brent Technical Levels

Immediate resistance at $51.02 (previous day’s high) if breached would open doors for $52.83 (June 9 high). On the lower side, a break below $50.00 would shift risk in favor of a drop to $48.26 (Apr 29 high).