BRENT Crude oil could see a pull back to $51.00
Brent Crude Oil has been in a steady decline ever since prices topped out near $53.00 a barrel in mid-October. Brent Oil is poised to hear lower in the coming weeks with the added uncertainty from the upcoming OPEC meeting where talks of production freeze from OPEC countries is likely to be formalized. It was in October that the Algiers oil summit saw Saudi Arabia and Russia conceding in limiting production despite differences among other oil producing nations.
Brent oil is down by roughly over 7%, at the time of writing with losses extending for third consecutive week.
Today's Oil inventories report by the EIA is forecast to show a build-up of 1.6 million barrels. US commercial crude oil inventories have been posting two straight weeks of draw down so far. But API reported a large build up in inventory.
From a technical outlook, Brent oil looks currently bearish. On Tuesday, the American petroleum institute (API) reported the largest build up in oil inventory. According to the official report, crude oil inventories were seen rising 9.3 million barrels which has been one of the reasons why Brent has been trending lower.
Although API report and the EIA’s official inventory report are seldom in confluence, the build-up does increase the risk of the EIA’s report to show a similar view. But at the same time, a drawdown from the EIA’s report could be very bullish for Brent oil.
How to trade binary
Brent oil is currently trading near the $47.80 handle but the declines have consolidated to form a descending wedge pattern. A breakout above $48.50 could see Brent oil extend the gains to as much as $50 a barrel.
Buy Brent Oil CALL option on a close above $48.50 for an end of day or 21:00 GMT expiry time. If price fails to close above $48.50 but shows a reversal, then purchasing PUT options makes for a better choice.