Brent bulls raring to return above $80/bbl

At the time of writing, Brent oil is teasing the $80/bbl mark.

The recent surge seen in oil benchmarks have been enabled by the Fed's policy pivot towards rate cuts in 2024.

More recently, the Red Sea attacks have added to the tailwinds for oil prices, as markets grow concerned over risks to global supplies.

As Brent's 14-day relative strength index (RSI) meanders around the 50 mark, still notably below the 70 threshold for "overbought" conditions", that implies further potential for gains.

However, recent gains for oil benchmarks may be on shifting sands.

If the market’s collective gaze reverts back to the darkening global demand outlook, amid ample US production and OPEC+ output uncertainties, that may well force oil prices to relinquish recent gains.

From a technical perspective ...

Look out for the looming formation of a "death cross".

If the 50-day simple moving average (SMA) crosses below the 200-day SMA, that could send a bearish signal to traders and trigger near-term declines for Brent.

For today, the US PCE Deflator data release may determine whether Brent spends Christmas above or below $80/bbl.

• Lower-than-expected inflation numbers may boost hopes for US rate cuts in 2024, potentially support US demand for oil.

Such a scenario may push Brent above $80/bbl today.

 

• However, higher-than-expected US PCE Deflators that forces markets to pare bets for Fed rate cuts in 2024 may cause Brent to falter.
  
  Immediate support may be drawn around its 21-daySMA, with the 16th November intraday low at $77.08 hovering slightly further south to potentially shore up support for Brent.