Brent oil hovering at the resistance level, looks promising above 80.20 mark

Brent oil prices witnessed bottom fishing at 70.30 levels in the mid-August 2018 and thereby gave a bounce-back near to its important resistance levels. The prices surged 14 per cent from the said low to a high of 80.13 hit on September 12, 2018.  

The rise was on the back of continued decline in crude inventories and EIA also forecasting further upward jump in the prices if rate tightening continues. Moreover, the oil producers have now acted upon the appeals of Trump made earlier on boycotting Iran. Thereby, reduction in oil supply from Iran and decrease in Venezuela production has led to this Brent oil escalation.  

Saudi Arabia, the largest supplier of oil, seems comfortable in letting the price rise beyond USD 80 yet again as the country is not very keen on maintaining demand and supply equilibrium for now.  

Technically, the Brent oil chart shows formation of an inverse head & shoulders pattern with a breakout at 78.80 levels on September 11. It witnessed a pullback of up to 77.37, but it has bounced back and is trailing at 78.50 to 79.50 levels. Oscillators are above 60 levels, which suggests momentum for now.  

Going forward, we see 80.20-80.50 as the resistances, where 80.50 is its 2018 high. In the medium term, we may see the prices soaring to 85-86 levels. On the downside 77.30 followed by 75.60-75.20 will act as the supports. 74 will act as the crucial support level in the medium term.