Is Brent oil rally over?

By FXStreet Brent futures are having a tough time taking out $42 hurdle since last few days, raising questions about the sustainability of the current rally from Jan 20 low.

Rally stalled by US rig count

The bullish momentum ran out of steam after Baker Hughes data released on Friday showed a rise in US oil rig count. Analysts are of the opinion the current rally in prices would see producers restart oil rigs. Therefore, markets are worried fresh supply may hit the markets, hence buying interest has dropped.

Moreover, possibility of OPEC and non-OPEC producers signing output freeze accord next month is unable to take out offers around $42 handle.

The loss of momentum could be attributed to overbought indicators on technical charts; hence a corrective move could be seen. However, another rise in oil rig count figure could endanger the currency rally in oil.

Brent Technical Levels

The futures currently trade around $41.38/barrel. The immediate hurdle is noted at $42. A convincing break above the same would negate arguments in favor of technical correction and crowd out shorts, resulting in a spike to $43.13 (Nov 16 low) – $45.00 handle.

Conversely, a break below $40.46 (Mar 21 low) would expose falling trend …read more

Source:: FX Street