Current trend

During the Asian session, Brent Crude Oil prices are recovering after a decline at the end of last week and the beginning of this week, testing the level of 76.50.

Recall that the poor July report from the US labor market increased the likelihood of an interest rate cut by the US Fed in September, with analysts now counting on an adjustment of 50 basis points. In addition, investors focused on the Bank of Japan’s decision to raise the cost of borrowing to 0.25% per annum, which led to local instability. Traders reacted by abruptly exiting carry trades, which intensified the decline of some trading instruments in pairs with the dollar, and global stock markets opened in the red zone on Monday.

Meanwhile, oil demand is supported by rising geopolitical tensions, primarily in the Middle East. Experts expect a response from Iran and the Palestinian movement Hamas to the Israeli attack that killed the leader of Hamas’ political bureau, Ismail Haniyeh. The escalation of the conflict could offset efforts to end the fire in the Gaza Strip.

Today, some pressure on the quotes was exerted by the report on oil reserves from the Energy Information Administration of the US Department of Energy (EIA) for the week ending August 2. The figure increased by 0.18M barrels after a sharp decrease of 4.495M barrels earlier, although analysts expected growth of 0.85M barrels. The agency once again raised its forecast for global oil demand for this year by 30.0K barrels per day to 102.94M barrels per day and reduced it for 2025 by 130.0K barrels per day to 104.55M barrels per day. According to the latest report from the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in WTI Crude Oil decreased to 245.5K from 276.0K previously. As for the dynamics, the gap in favor of buyers remains, and the weekly reduction is caused by the fixation of some sell positions. The balance of “bulls” among producers was 368.930K against 336.934K among “bears”. Last week, buyers opened 5.106K contracts, while sellers reduced them by 6.199K in an attempt to slow down the current downtrend.

Support and resistance

On the daily chart, Bollinger bands are falling. The price range is expanding, letting the “bears” renew local lows. The MACD indicator is decreasing, keeping a strong sell signal (the histogram is below the signal line). Stochastic, having reached the level of “20”, is trying to reverse into an ascending plane, signaling an upward correction soon.

Resistance levels: 77.00, 77.86, 79.00, 80.00.

Support levels: 76.05, 75.04, 74.00, 73.00.

Trading tips

Long positions may be opened after a breakout of 77.00, with the target at 79.00. Stop loss — 76.05. Implementation period: 1–2 days.

Short positions may be opened after a rebound from the 77.00 level and a breakdown of 76.05, with the target at 74.00. Stop loss — 77.00.