2.5 month rally of the Brent oil ends
Yesterday Brent showed a decline and could even touch the low 38.98, but by the end of the trading day the Brent oil made some attempts to recover slightly.
The Brent oil got pressure from sellers and rushed to the lower boundary of the March price range of $38.00 - $42.50. It is worth to say that the oil doesn’t have any reason to decline, but the actual dynamics of a moderate decline tells that investors overestimate their expectations.
Investors believe that the current rally that we have seen since mid-January comes to the end. A lack of new catalysts restricts the opening of long transactions. In fact, this is not the assumption that the Brent will fall – it’s the assumption that the oil will not continue to grow, and it is time to take profits.
Today the US will publish the report on crude oil inventories that can attract the market's attention in the absence of other news. If the report shows the further increase in volumes, it can only accelerate the decline, especially according to the current disappointment.
How to trade
We purchase PUT options if Brent crude falls below $39.04 In this case, its future goal could be around $38.
Asset: Brent oil
Target price: 39.04
Expiry time: 20:00 GMT