The Fed's Dovish Tone Could Boost Oil
Brent oil traded steadily in the US$67–68 per barrel range on Friday (August 22nd), recording a weekly gain of around 2.7% after two consecutive weeks of declines. This strengthening was driven by a combination of geopolitical factors and stronger-than-expected global energy demand data.
Fundamentally, the energy market remains overshadowed by the far-from-peaceful Russia–Ukraine conflict, keeping a risk premium attached to oil prices. Meanwhile, reports of a 6 million barrel decline in US crude oil inventories in the past week signal that energy demand remains solid, especially amid the summer holiday season. Investors are now awaiting the outcome of the Jackson Hole meeting, which could potentially provide clues about the direction of the Fed's monetary policy. An interest rate cut could stimulate faster global economic growth, thereby boosting energy consumption.
Technically, Brent prices remain in a short-term bullish trend. Technical indicators such as the RSI, MACD, stochastic, and moving averages (MA5 to MA200) indicate strong buy signals. In fact, the chart shows an inverted head and shoulders pattern, which typically signals potential further strengthening. If this momentum continues, Brent could potentially test the next psychological level at around US$68.90 per barrel.
With a combination of geopolitical factors, supply tightening, and possible dovish sentiment emerging from Jackson Hole, Brent oil prices have the potential to remain on a positive trend in the short term.
Source: Newsmaker.id
