BRN consolidates around $80

After a rapid rise above $80/bbl this time last week, amid the production tightening by Russia and Saudi Arabia, oil prices were pushed back and started to consolidate at $78-$81/bbl.

A smaller-than-expected drop in US crude inventories, weak GDP data from China, and a potential increase in Libya’s production capacity is deterring the bulls from reaching new monthly highs.

The Fed’s rate decision next week and guidance on future policy might have a major effect on whether or not the prices stay above $80/bbl or even ultimately reach the next psychologically important $87.0 level.

 

There’s a strong gravitational pull around the psychologically-important $80/bbl level, as oil markets await the next catalyst. 

That catalyst might come in the form of the Fed confirming the pause on interest rate hikes in the next cycle, and BRN  might very well reach the 200-period SMA. 

However, if the Fed signals its intent to push ahead with another rate hike after July, that could see BRN re-testing the 100-day SMA for support.