Selling Brent with a target of $80.5 per barrel

Last week, the International Energy Agency’s June report was published. Here's a look at its key points:

“World oil demand growth continues to slow, with 2024 gains now seen at 960 kb/d, 100 kb/d below last month’s forecast. 

Global oil supply rose by 520 kb/d in May to 102.5 mb/d. For the year as a whole, production increases by 690 kb/d, led by non-OPEC+ gains of 1.4 mb/d. OPEC+ supply falls by 740 kb/d if voluntary cuts are maintained. In 2025, global supply is forecast to rise by 1.8 mb/d, as non-OPEC+ output increases by 1.5 mb/d.

2024 and 2025 crude runs forecasts are 100 kb/d higher than last month’s Report, at 83.5 mb/d and 84.2 mb/d, respectively. Stronger OECD 2Q24 throughputs outpaced still-weak Chinese runs, which slumped to Covid-era lows in April.

Global observed oil inventories built by 19.3 mb in April. 

After the 2 June OPEC+ meeting, traders took a bearish view of the gradual unwinding of last year’s voluntary output cuts.”

In summary, the findings of the report indicate that there might be an excess of oil supply over demand. In other words, the market is experiencing a bearish sentiment.

According to CME Group data, the open interest on today's expiry day (June 17) is 1228 for call options and 2074 for put options.

Thus, the buy/sell ratio is at the level of 0.62. If we consider the bearish trend, the likely target for Brent will be the price level of 80.5.

The possible downward movement is supported by the bearish divergence of the Brent price and the RSI.

The overall recommendation is to sell Brent oil.

Profits should be taken at the level of 80.5. A Stop-Loss could be set at the level of 85.0.

The possible loss should not exceed 2% of your deposit funds.