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Brent Crude Oil Forecast 4 Apr 2016

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Brent Crude Oil Forecast 4 Apr 2016
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Brent crude oil dropped after Prince of Saudi Arabia statement

On Friday, the Brent crude fell from $40 per barrel to $38.64 after comments from the Prince of Saudi Arabia. Prince said that Saudi Arabia will agree to reduce oil production, if other countries do the same.

Remind that earlier Saudi Arabia was willing to reduce the oil production even though Iran, which has refused to do. Thus, the probability that an agreement will be reached in Doha, on 17 April has decreased significantly.

Prince hinted that if any country, on the contrary, increases the oil production, Arabia will also increase. Moreover, Saudi Arabia plans to reduce its dependence on oil by creating a stabilization fund, $2 trillion. Of course, these fears are unlikely to cause a fall below $38 per barrel, but they will not allow the Brent oil to grow.

Thus, during the week, the Brent crude oil will be held within the range of $38.30 - $42.50. The oil will be able to reach the top of the range if the US crude oil stocks show a reduction and a further reduction in the volume of production.

How to trade

We would buy PUT options if the price drops below $37.75. We would buy CALL options if the price rises above $38.50.

Expiry time: 20:00 GMT

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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