Brent Crude Breaks to Four Month Highs
With Brent crude reaching four-month highs, let's delve into the factors propelling this surge and explore potential trading opportunities.
What’s Driving Oil Higher?
A key catalyst behind last week’s breakout in Brent crude was the release of a report from the International Energy Agency (IEA), which highlighted a tightening market outlook for 2024.
The IEA revised its projection for 2024 oil demand growth upwards for the fourth time since November, citing disruptions in Red Sea shipping due to Houthi attacks. However, it cautioned that the ongoing global economic slowdown presents an additional challenge to oil consumption.
The IEA anticipates a 1.3 million barrels per day increase in oil demand for 2024, reflecting a rise of 110,000 bpd compared to the previous month but remaining below the 2.3 million bpd growth seen last year.
Additionally, the IEA adjusted its 2024 supply forecast downward, now expecting oil supply to climb by 800,000 bpd to reach 102.9 million bpd this year.
The Breakout: Transition from Contraction to Expansion
Brent crude has been carving out a series of higher swing lows on the daily candle chart since the turn of the year, but the market had been contained beneath a key area of resistance created by the October 2023 swing low and November 2023 swing high (see daily candle chart below).
This series of higher swing lows into horizontal resistance created an ascending triangle pattern. As prices were funnelled into the apex of the pattern, a tight sideways range developed in late February early March.
The breakout last week relieved the market pressure, transitioning Brent crude from contraction to expansion.
Brent Crude Daily Candle Chart
Past performance is not a reliable indicator of future results
Hourly Candle Chart Analysis
Drilling down to the hourly candle chart reveals that Brent crude has broken above last week’s highs during early European trading. This is a bullish sign and underlines the current level of momentum in the market.
Using lower timeframes in conjunction with higher timeframe breakouts is an interesting approach to crafting potentially insightful trade setups.
Brent Crude Hourly 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. 84.01% 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.
What’s Driving Oil Higher?
A key catalyst behind last week’s breakout in Brent crude was the release of a report from the International Energy Agency (IEA), which highlighted a tightening market outlook for 2024.
The IEA revised its projection for 2024 oil demand growth upwards for the fourth time since November, citing disruptions in Red Sea shipping due to Houthi attacks. However, it cautioned that the ongoing global economic slowdown presents an additional challenge to oil consumption.
The IEA anticipates a 1.3 million barrels per day increase in oil demand for 2024, reflecting a rise of 110,000 bpd compared to the previous month but remaining below the 2.3 million bpd growth seen last year.
Additionally, the IEA adjusted its 2024 supply forecast downward, now expecting oil supply to climb by 800,000 bpd to reach 102.9 million bpd this year.
The Breakout: Transition from Contraction to Expansion
Brent crude has been carving out a series of higher swing lows on the daily candle chart since the turn of the year, but the market had been contained beneath a key area of resistance created by the October 2023 swing low and November 2023 swing high (see daily candle chart below).
This series of higher swing lows into horizontal resistance created an ascending triangle pattern. As prices were funnelled into the apex of the pattern, a tight sideways range developed in late February early March.
The breakout last week relieved the market pressure, transitioning Brent crude from contraction to expansion.
Brent Crude Daily Candle Chart
Past performance is not a reliable indicator of future results
Hourly Candle Chart Analysis
Drilling down to the hourly candle chart reveals that Brent crude has broken above last week’s highs during early European trading. This is a bullish sign and underlines the current level of momentum in the market.
Using lower timeframes in conjunction with higher timeframe breakouts is an interesting approach to crafting potentially insightful trade setups.
Brent Crude Hourly 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. 84.01% 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.
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