Brent crude oil price multi-timeframe technical analysis

Crude oil prices remained in a consolidation phase as the market continued reflecting on the supply and demand dynamics. Brent, the global benchmark, dropped to a low of $83.75 on Monday while the West Texas Intermediate (WTI) moved to $77.27. It has plunged by ~60% from its highest point in 2022.

Brent crude oil price forecast

There are numerous moving parts that are affecting oil prices. On the one hand, there is the issue of supply. This month, Russia announced that it will slash production by about 500k barrels per day in retaliation to EU’s sanctions. Its goal was to boost oil prices even as it sold little of it.

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There are other supply issues. The US has committed to continue releasing oil from its strategic petroleum reserves (SPR) in a bid to lower prices. Many American companies are also boosting their oil production albeit at a slower pace.

Meanwhile, there are some challenges in Nigeria, the biggest African producer. As I wrote in this report, Nigeria is going through a major currency crisis as it heads towards a general election. In the supply side, we are seeing stable oil purchases from China and other countries.

On the daily chart, we see that the Brent crude oil price is trading at an important level since it is slightly below the upper side of the descending channel. It seems like it has formed a small double-top pattern whose neckline is at $79.37. In technical analysis and price action, this pattern is usually a bearish sign. 

Crude oil’s bearish trend is also being supported by the 50-day moving average while the Relative Strength Index (RSI) has moved to the neutral point. Therefore, oil prices will likely have a bearish breakout as sellers target the lower side of the channel between $69 and $75.

Oil price analysis weekly chart

On the weekly chart, we see that Brent has been moving sideways in the past few days. The current price is important because it coincides with the highest level in October 2018. Like on the daily chart, it has moved below the 50-day moving average and the 38.2% retracement point.

Therefore, the medium-term outlook is where oil prices makes a bullish breakout and rise to the key resistance at $100. In the near term, we can’t rule out a situation where prices will retest the support level at about $70.