Selling Brent oil from $72.88 with target at $71.00 per barrel

OPEC’s November report on the global oil market was released yesterday. The group cut its outlook for global oil demand growth this year and next, stressing weakness in China, India and some other regions. This is the fourth consecutive downward revision of its forecast for 2024.

The weaker outlook highlights the difficulties facing OPEC+, which includes the group’s core members and partners. Earlier this month, the group had to postpone its plan to start increasing production in December because of falling prices.

In a monthly report, the OPEC stated that global oil demand will rise by 1.82 million barrels per day (bpd) in 2024, down from the 1.93 million bpd increase forecast last month. Until August, OPEC had kept the outlook unchanged since its first forecast in July 2023.

OPEC also lowered its estimate of global demand growth in 2025 to 1.54 million bpd from 1.64 million bpd.

Most of the downgrade in 2024 has come from China. OPEC cut China’s growth forecast to 450,000 bpd from 580,000 bpd and reported that diesel consumption fell year-on-year for the seventh consecutive month in September.

Yesterday, the US Energy Information Administration (EIA) also released its short-term energy market outlook, in which it slightly raised its projections for US oil production to an average of 13.23 million bpd this year, up 300,000 bpd from last year’s record of 12.93 million bpd and above the previously forecast 13.22 million bpd.

The EIA also raised its 2024 global oil production forecast to 102.6 million bpd from the previously estimated 102.5 million bpd. Next year, it expects global production of 104.7 million bpd, up from 104.5 million bpd forecast before.

Projections for oil demand growth from the EIA are weaker than those from OPEC at around 1 million bpd in 2024, although this is higher than its previous forecast of around 900,000 bpd. As analysts say, concern over China’s demand remains a key factor in the decline in oil prices, including Brent.

From a technical point of view, it makes more sense to sell Brent crude oil from a level above the current price for a better profit-to-risk ratio.

The overall recommendation is to sell Brent oil from the level of 72.8.

Profits should be taken at the level of 71.00. A Stop loss could be set at the level of 74.00.

The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.