Brent Crude Oil Surges, Reigniting a Retest of the Yearly High

Brent Crude Oil News and Analysis

• Declining crude stocks, stalled Iran Nuclear deal and Putin’s gas payment requirement sends oil higher
• OPEC + to meet on March 31st to set output targets for May
• Brent crude oil: technical levels to consider

Brent Crude Oil Prices Continue Impressive Run

Brent crude oil trades higher today off the back of declining oil stock figures, the upcoming OPEC+ meeting and the overall boost to the energy sector resulting from Putin’s announcement to “unfriendly nations” that future gas purchases are to be paid for in Russian Rubles.

While Putin’s remarks mainly affected European natural gas prices, it appears to have buoyed the overall energy complex as gasoline, heating oil, natural gas and WTI and Brent crude oil all experiencing higher prices today.

Oil Stocks Show a Drastic Decline as Demand Pushes on

Yesterday, the Energy Information Agency (EIA) published its latest weekly petroleum status report, which covers data up until the 18th of March. Most notably, crude oil stocks witnessed a massive decline of 2.508 million barrels when stocks were forecast to see an increase of 0.114 million. US crude oil inventories currently stands at 413.4 million barrels and is 13% below the 5-year average for this time of the year.

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What’s Next on the Agenda for Oil?

Oil traders now turn their attention to the OPEC+ meeting on March the 31st where the group will discuss their output target for May. It is largely expected that the existing agreement to increase oil output by 400,000 barrels per day will go ahead as planned as this has been the case in previous meetings.

Recent meetings have been uncharacteristically brief in duration but this month’s agenda may require greater engagement amid large scale sanctions of Russian oil imports. OPEC+ has previously stated that the large price spikes should not be attributed to OPEC’s policies but is rather the result of fears of supply shortages.

In addition, the Iran Nuclear deal has stalled in recent weeks with little progress being reported. As such, the hope of a return of Iranian oil supply is likely to support current, elevated oil prices.

Brent Crude Oil Daily Chart

Source: TradingView, prepared by Richard Snow

Brent Crude oil prices pulled back extensively after reaching the recent high of around $139. A bounce off the 50 simple moving average along with the appearance of a morning star candle stick pattern lead the way for a bullish continuation.

A retest of $139 remains constructive above $113. Failure to trade above $113, opens the door to 97.20 as the next level of support.

--- Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX