By Camilo Botia
Oil prices surged nearly 2% on Monday as anxiety over maritime disruptions in the Red Sea outweighed concerns about slowing global demand. The rally came after Iran-backed Yemeni militants attacked a Norwegian-owned vessel, prompting companies such as BP (British Petroleum) to halt all transit through the crucial waterway.
Fears of escalating violence and rising insurance premiums are forcing shipping companies to reroute vessels, adding to transportation costs and tightening global oil supply. Despite ample reserves and potential output cuts announced by Russia, this contributed to the price spike.
The U.S. is building a coalition to address the Houthi threat, and defence ministers are holding virtual talks to stabilize markets and the supply chain. While some analysts see Monday’s rally as a potential turning point, concerns about slowing economic growth and the global oil surplus remain. The short-term outlook depends on the evolution of the Red Sea situation and the effectiveness of international efforts to de-escalate the conflict. Additionally, mentioning robust U.S. production advancements, Goldman Sachs has revised its 2024 Brent crude oil price forecast. The adjusted prediction anticipates an average price of $81 per barrel, a 12% decrease from the initial $92. The potential peak is estimated at $85 in June.
As a result, Brent’s price has been trading around the $78.59 resistance. It has accumulated four consecutive bullish sessions since last Wednesday, when it got close to reaching an oversold condition, as shown on the RSI indicator. If the price attempts and breaks $78.50, the next resistance will be at the 200-day moving average at around $84. However, if the supply disruption through the Red Sea is addressed effectively and fears of an economic slowdown + a possible global surplus persist, the price could maintain its bearish trend from September and reach $71.52.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.
Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.
Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.
Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.
Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.
*All trading involves risk.
