Oil price climbs as US and UK mount strikes on Houthi targets
There are a number of factors that are playing out on the price of oil at the moment, but the most recent uptick in geopolitics around the Red Sea is pushing up prices.
Fundamentally, it’s mostly about the potential for supply constraints, but in reality there are a myriad of other factors to consider. IGTV’s Jeremy Naylor looks at the pressures on the oil sector and how to trade both Brent and US Crude (WTI).
(AI Video Summary)
Oil price being pushed up
The price of oil can be influenced by many different things, like strikes or disruptions in oil routes. This can cause extra costs and create concerns about the demand for oil. However, the supply of oil is also being affected because companies aren't investing in new oil exploration.
Impact on Brent crude and WTI crude oil
If we look at the chart of oil prices, both Brent crude and WTI crude are moving in the same direction. Brent, for example, is showing a pattern that looks like a triangle. By measuring the height of the triangle and applying it, we can find a target price of $86.50. This means that traders might want to buy Brent at $79.61 and hope to make a profit when the price goes up. To manage the risk, they should set a stop-loss below a certain level. There is also an Elliott Wave pattern, which suggests that the price will go up to $86.50 and then drop again.
The same analysis can be applied to WTI, which is also showing a triangle pattern. The target price for WTI is $78, which happens to be the same as the 200-day moving average. Again, there is an Elliott Wave pattern that supports this target. However, it's important to remember that this analysis is only focused on the immediate technical aspects and the future of oil prices is uncertain.
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