The price of Brent crude (Brent) is trading near $94 after bouncing off the lower edge of an upward channel, defying a roughly 20% decline that traders are pinning on hopes for a ceasefire in Iran.
The rebound comes as three of the world’s top oil executives warned that the physical market is days away from a supply squeeze that could push Brent towards $150.
Crude oil maintains its channel as inventories are depleted
Brent crude fell about 20 percent from its highest levels in May, as traders expected the disruption in the Strait of Hormuz to end. However, Brent crude oil price held the lower trendline of the ascending channel it has followed since early March, a structure in which the price rises between two parallel upward-sloping lines.
This defense is important because the price has also retraced the 100-day Exponential Moving Average (EMA), the trend line that weighs on recent prices the most, suggesting that the uptrend remains intact despite the sell-off.
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The physical background explains the flexibility. ExxonMobil Senior Vice President Neil Chapman She told the Bernstein conference that markets were still weeks away from inventory levels rarely seen, expecting Brent crude to rise to $150 or $160 a barrel. According to the International Energy Agency, Observed global inventories decreased by about 246 million barrels during the months of March and April.
To extend the recovery, Brent must reclaim the 20-day EMA near $99. When it last crossed this line on May 11, the price rose by 9%. The recovery on April 21 was preceded by a 17% increase. As temporary barriers diminish, the question is whether positioning confirms the bullish case.
However, there is a bearish catalyst on the horizon as well. The 20-day moving average is close to the 50-day moving average. If it crosses the 50-day moving average, which is a bearish crossover, the immediate outlook for oil price could become weak.
Brent crude position turns bullish as selling slows
Options traders seem to agree with executives and disagree with crossover risk. The US Brent Oil Fund’s short ratio, a measure that compares bearish bets with bullish buy bets, has collapsed since late May.
The volume ratio fell from 0.20 on May 22 to about 0.08, while the open interest ratio fell from 0.16 to about 0.14. A decline in the ratio combined with a price rebound indicates that bearish bets are being liquidated rather than rolled over, leaving trading positions heavily skewed to the upside.
This flow Corresponds to the CEO of Chevron Mike Wirth, who said the physical market doesn’t care about negotiations.
He warned that crude oil and product inventories are declining around the world, with June and July considered critical months. Wirth noted that U.S. distillate inventories are at their lowest levels since 2003, and said some Asian markets have already seen rationing.
As options flow tends to the upside, the price chart sets targets.
Brent crude oil price levels point towards the $150 region
The setting carries a hidden signal. Between March 10 and May 29 Brent printed The Relative Strength Index (RSI), a momentum gauge that measures the speed of price movements on a scale of zero to 100, registered a lower low. This subtle bullish divergence often precedes a recovery, and the last such signal in March triggered a rally of roughly 33%.
Compared to the swings of April 17, the levels are clear. Brent crude must first break above $96, then a break above $101 will put it above all major moving averages. A repeat of the 33% move would take the price towards the 1.0 Fibonacci extension at $119, a level that indicates where the entire previous advance is headed.
After $119, the session high opens, with the 1.618 extension at $137 and the 2.618 extension at $167. The $150 area identified by Exxon lies in between.
The warning is real. A bearish crossover is still on the horizon, and failure to reclaim $99 keeps the price confined near the bottom of the channel. ADNOC (Abu Dhabi National Oil Company) CEO Sultan Al Jaber warned that full Hormuz flows may not return before 2027. This means that the signed agreement will not restore supplies quickly.
Currently, $101 is between a pullback towards $119 and the $150 area from a slide back to the channel’s lower trend line.
this post Why do 3 energy executives say Brent could hit $150 in weeks? appeared first on BeInCrypto.
