Brent is trading in a corrective mode today after a nearly flat closing on Friday, with the barrel is now treading water around the $73 level. The current profit taking looks limited for the time being, and should prices refrain from losing the intermediate support at $72,80, there will be a chance of regaining the bullish move in the short term.
Aside from technical factors, positive sentiment in the crude market was tempered by further rise in the US drilling activity. As Baker Hughes reported, the drillers added five oil rigs in the week ended April 20, to 820, which is the highest since March 2015. It signals that another rise in the US crude production is on the way, and fresh data this week may confirm this dynamics. Meanwhile, Trump’s tweet on “artificially” boosted oil price had only limited and short-term impact on Brent.
The broader picture in the oil market remains bullish as OPEC’s efforts, Venezuelan crisis and the risk of reimposing US sanctions against the Iranian exports continue to support prices which are also propped up by increasing global demand amid a steady growth in the global economy. However, in the short term, further downside correction is possible, which looks like a good buying opportunity with the prospect of a recovery above $74.