Brent crude oil in correction and could fall to 78.00

Brent oil has been falling in recent days after last Friday’s attempt to break through the 82.60 resistance level. After surviving the bounce, prices fell to 79.42, followed by a slight recovery to 80.09.

This fall in oil prices is attributed to a combination of factors. The main influence was the anticipation of Donald Trump’s future policies. It was announced that the US President was prepared to declare an energy emergency in order to increase oil production. In addition, there is now uncertainty about sanctions on Russian oil, as Trump may ease restrictions in exchange for concessions from Russia, potentially increasing supply in the market.

The situation in China, the world’s second largest oil consumer, is also having an impact on price dynamics. The slowdown in the growth of oil consumption in China, caused by deflationary processes and economic problems, reduces the overall demand for oil, which in turn leads to further pressure on prices.

In addition, the EIA forecast points to an oil glut in 2025. As a result, the average price of Brent could reach $74 per barrel. According to the agency, this is due to oversupply and a possible increase in oil reserves.

Oil prices continue to be supported by cold weather in Canada, the northern and central regions of the US, and earlier sanctions on Russian and Iranian oil imposed by the Biden administration.

In the coming weeks, the main events likely to influence the market will be the release of data on the Federal Reserve’s interest rate decision at the end of January and the OPEC meeting at the beginning of February.

From a technical point of view, the RSI indicator confirms that the price of oil has recently reached an overbought level and is now undergoing a correction. The MACD indicates that the upward momentum is waning and that a reversal in trend may be imminent. The current price movement, as well as the MACD and RSI readings, suggest that the price may be entering a consolidation phase.

Current recommendation:

Sell at the current price. Stop loss – 80.96, take profit – 78.00.