Oil prices stabilize after drop to near 6-month low

Brent crude futures

Brent Crude Oil is trading down 0.39% at 96.27

Oil prices were broadly steady on Thursday as the market weighed tight supply against demand fears, after a build in U.S. crude and gasoline stocks sent prices to multi-month lows in the previous session.

Brent crude futures inched up 36 cents, or 0.37% to $97.14 a barrel by 0925 GMT, while West Texas Intermediate (WTI) crude futures were up 43 cents, a 0.47% gain, at $91.09.

Both benchmarks fell to on Wednesday to their weakest levels since before Russia’s Feb. 24 invasion of Ukraine, that Moscow calls “a special operation”.

The move followed an unexpected surge in U.S. crude inventories last week. Gasoline stocks, the proxy for demand, also showed a surprise build as demand slowed, the Energy Information Administration said.

The decision on Wednesday by the Organization of the Petroleum Exporting Countries and allies such as Russia, known as OPEC+, to raise its oil output target by 100,000 barrels per day (bpd) in September has added to bearish sentiment.

“The largely symbolic increase will obviously not provide a significant buffer to any potential supply shock, but the oil balance will not get tighter either,” said Tamas Varga of oil broker PVM.

While the increase is equivalent to just 0.1% of global demand, the demand outlook remains clouded by rising fears of an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world’s largest oil importer.

On technical fronts Brent Crude Oil RSI stood at 39.13 and currently it is trading below all MA. So, SELL position can be taken with following target and stoploss:

TRADE SIGNAL – : Brent Crude Oil – SELL: 96.34, TARGET: 95.81, STOP LOSS : 96.99

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