The Brent crude oil price drifted upwards on Monday as investors focused on the upcoming driving season in the United States. It rose for two straight days, moving to the key resistance point at $82.50, higher than last week’s low of $80.60.
Driving season ahead
The next crucial catalyst for crude oil price is the US driving season, which starts after the Memorial Holiday weekend. This season is characterised by more driving in the United States and higher demand for gasoline.
In some cases, oil prices tend to rise during the driving season, which explains why Joe Biden’s administration has announced plans to release 1 million barrels of oil. His goal is to keep gas prices lower ahead of the election in November.
The new SPR sale will push the country’s reserves to about 367 million barrels, the lowest level in decades. Biden’s administration has sold over 240 million barrels since 2020.
It is unclear whether these sales will help lower the price of Brent and West Texas Intermediate (WTI). Also, it is less certain whether demand in the driving season will drive prices higher.
The oil industry is dealing with numerous moving parts. OPEC+ has imposed a 2 million barrel a day supply cap in a bid to boost prices. At the same time, Russia is still pumping millions of barrels each day despite western sanctions.
Additionally, flash economic numbers show that the world economy is doing modestly well, a positive sign for oil. China grew by over 5% in the first quarter and its trade figures are still strong. European economies like in Germany and France have started growing, raising the possibility that the bloc will emerge from a recession.
Altogether, the Energy Information Administration (EIA) expects that the global demand will rise to over 102.84 million barrels a day this year. While the IEA has slashed its demand outlook, it remained at 102.7 million bpd, higher than the expected supply.
Brent crude oil price forecast
The daily chart shows that the price of Brent has moved sideways in the past few months. It has retreated from the month-to-date high of about $92 to the current $82.80. At the same time, the 50-day and 100-day Exponential Moving Averages (EMA) have formed a bearish crossover pattern.
Brent has also formed a symmetrical triangle pattern, which is a neutral pattern. Therefore, Brent will likely remain in a tight range during the current driving season. The key support and resistance levels will be at $79 and $92, its lower and upper sides of the triangle pattern.
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