The recent drop in Brent crude oil prices to $83.95 per barrel has been attributed to the increase in crude oil inventories and production in the United States. The Department of Energy reported a rise of 7.30 million barrels in inventories, contrary to the predicted decrease of 2.3 million barrels. This unexpected surge in supply has put downward pressure on oil prices.
The substantial increase in February’s oil production to 13.15 million barrels per day from January’s 12.58 million barrels has provided bearish signals for the market. This surge in production is the most significant monthly increase in three and a half years, further contributing to the downward trend in oil prices.
The oil market is not only affected by US inventory and production data but also by global geopolitical factors. The potential for the US to replenish its strategic hydrocarbon reserves if prices drop below $79.00 per barrel is a topic of discussion. Moreover, the stabilisation in the Middle East, with hopes for a ceasefire between Israel and Hamas facilitated by Egypt, has contributed to the decrease in oil prices.
Looking at the technical analysis of Brent crude oil, on the H4 chart, the price has formed a consolidation range around $87.50, with a correction wave extending downwards. The price has already reached $83.50, and a further decline to $82.82 is possible. However, after this correction phase, a new wave of growth towards $88.60 and potentially up to $95.00 is anticipated.
On the H1 chart, a fifth correction structure is developing towards $82.72, with a subsequent growth phase expected towards $88.58. This bullish outlook is supported by the MACD indicator and the Stochastic oscillator, indicating a potential uptrend in oil prices in the near future.