Oil’s headwinds continue

Brent Crude (symbol ‘UKOIL’) made losses in the first week of August, reaching around $95 and erasing all the gains after Russia’s latest invasion of Ukraine. The USA’s technical recession and signs of a general economic slowdown around the world have affected sentiment negatively, while there are some signs of increasing supply from Libya.

‘OPEC remains pretty confident it seems, still signalling very tight supply and with Saudi Arabia hiking prices for Asian buyers again,’ said Michael Stark at Exness, ‘But the focus now seems to be shifting to demand. American demand for petrol in July was significantly lower than the seasonal norm before Covid and supply from the USA has continued to increase slowly but fairly steadily this summer so far.’

The technical picture for Brent is generally quite negative, with the price now below all three of the 50, 100 and 200 daily moving averages and the 50 SMA from Bands in the process of death crossing the 100. Selling volume has dominated over the last few days. The 161.8% weekly Fibonacci extension seems to be an obvious support in the near term, but a longer term sell from here seems to be risky given that $100 and the 200 SMA are still not clearly broken to the downside and 4 August was the lowest close since February. Short-term trading might be in view here until momentum downward becomes clearer.

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