Brent Crude Oil Futures (NYMEX: BB) ticked higher as upside momentum picked up steam from growing risk appetite. The banking sector crisis is seemingly in the rearview mirror, and safe-haven assets have been giving into risk-asset demand. As bullish traders advanced, the Brent Crude Oil Futures gained 2.88% in the prior week.
Adding fuel to the bullish fire was the unexpected supply constraints in the Iraqi Kurdistan region, which saw supply of 450,000 barrels per day halted, affecting 1% of the global crude oil supply adversely. Companies in the region expect the dispute between Turkey and Iraq to continue until a settlement is reached.
Demand for crude oil seems healthy, following a -7.4060M decline in the crude inventory below consensus, based on the Energy Information Administration’s (EIA) stock count.
The Brent crude oil futures steadily gained as an uptrend unfolded following the breakout above the descending channel pattern. Following a high volume breakout above the $76.93 per barrel (BLL) level, support was established, while resistance sits at the $83.06 BLL level.
Despite the bullish trend firming itself with the price breaking above the 100-day moving average, price retraced towards support at the $76.93 level. Bullish traders looking to keep the upward trend alive will likely be enticed to pile into the market near support, with the $83.06 level earmarked as a probable level of interest.
Alternatively, bears could make a case with a high volume breakout below the support level of $76.93 level. If bearish traders knock out bullish traders, the price will likely be lowered, with bears probably setting sights on the $72.94 level.
The key driver for the Brent Crude Oil Futures will be the critical inflation reading, the PCE Index, due tomorrow. The labour market reports due today could also provide some short-term volatility. Traders will gauge inflation’s progress with the Federal Reserve’s (Fed) next move in mind. Higher inflation could prompt the Fed to slow down the economy with more rate hikes, offsetting upside potential on supply constraints’ and strong demand. The $76.93 level will be a pivotal level to watch.
Sources: EIA, Reuters, TradingView