Crude oil price traded in the green on Monday as concerns over tight supplies outpaced fears over global demand growth. Even so, a stronger US dollar has continued to curb its gains.
Fundamentals
Concerns over tighter global supplies have offsetting woes over the commodity’s demand growth; an aspect that has yielded the rebound reported over the past three sessions. In particular, lower exports from Russia and Saudi Arabia are boosting prices. As has been the case since the COVID-19 pandemic, OPEC+ has been keen on boosting prices creating a balance within the supply/demand dynamics.
Even so, a stronger US dollar has continued to curb crude oil price gains. While it was trading in the red in early Monday trade, the dollar index remains on a rebound as has been the case for a month now. The currency was boosted by the smaller-than-expected Chinese rate cut.
Investors are now keen on the Fed’s Jackson Hole symposium scheduled for later in the week. The economic event is expected to give guidance on the direction of US interest rates in coming months.
In mid-July, the dollar index dropped below the psychological level of $100 for the first time since April 2022. It has since rebounded to $103.28 as at the time of writing. As is the case with other dollar-priced assets, a stronger US dollar makes crude oil more expensive for buyers holding foreign currencies.
Brent crude oil price prediction
Crude oil price commenced the new week on its front foot; extending gains made late last week. Brent oil has been on a rebound after hitting a two-week low in mid last week at 83.08. As at the time of writing, the benchmark for global oil was at 85.37.
A look at its daily chart shows the asset trading above the 50 and 25-day EMAs. This is an indication that it will likely record additional gains as the week unfolds.
In the short term, I expect crude oil price to continue trading within the range of between 82.00 and 87.57. Even with the probable rebound past the aforementioned resistance level, I am of the opinion that the psychological zone of 90 will remain evasive to the bulls for a while longer.
