Brent set for further bearish correction
After a five-day winning streak, crude oil prices retreated on Monday, as geopolitical worries have abated. Easing concerns about escalation in Syria fuelled a partial profit taking at attractive levels. Brent is trading flat today, following failed attempts to regain the bullish impetus during the morning trading.
As global oil markets come closer to rebalancing, prices start to show a more significant reaction to geopolitical risks posing a threat to supplies from Middle East in particular. However, this factor is traditionally unstable and unreliable in the longer term. In a broader picture, the market is still supported by OPEC+ efforts as well as by expectations of extending oil cut deal in June.
On the other hand, the bullishness is restrained by US shale drilling and production increase. In the sort-term, Brent will focus on fresh US inventory and production data, which may show another rise and therefore put prices under a bearish pressure, especially as the geopolitical factor recedes. As such, Brent will hardly be able to climb back above the $72 mark in the nearest future. The immediate support comes at $71. Should the asset lose this level, profit taking may accelerate in the short-term.
As global oil markets come closer to rebalancing, prices start to show a more significant reaction to geopolitical risks posing a threat to supplies from Middle East in particular. However, this factor is traditionally unstable and unreliable in the longer term. In a broader picture, the market is still supported by OPEC+ efforts as well as by expectations of extending oil cut deal in June.
On the other hand, the bullishness is restrained by US shale drilling and production increase. In the sort-term, Brent will focus on fresh US inventory and production data, which may show another rise and therefore put prices under a bearish pressure, especially as the geopolitical factor recedes. As such, Brent will hardly be able to climb back above the $72 mark in the nearest future. The immediate support comes at $71. Should the asset lose this level, profit taking may accelerate in the short-term.