Brent crude oil have stabilized after hitting a fresh multi-week trading high close to the $75.00 level, due to the threat of US crude production being harmed by the incoming Hurricane Nicholas.
Other factors supporting higher prices are the IEA and OPEC both agreeing that we will see a return to 100 million barrels per day demand for oil within the next few months as the global recovery intensifies.
Additionally, European gas prices have started to surge alongside Natural Gas, which leading analysts believe will be holy positive for the price of both Brent and Crude oil over the coming weeks and months.
Another factor to consider is risk-off sentiment. Oil prices are often seen as a proxy for risk-on and risk-off sentiment. Due to economic problems in China and mixed US data it may be difficult for Brent to hold the $75 benchmark level.
Retail market sentiment towards Brent Crude is very bearish, which could hint at more strong gains ahead as the skew between bulls and bears is starting to widen.
The ActivTrader Market Sentiment tool shows that some 73 percent of traders are bearish towards further gains in Brent oil. The short squeeze will likely continue while traders are this bearish.
Brent Crude Oil Short-Term Technical Analysis
According to the four-hour time frame Brent crude is starting to create higher highs again, which is bullish, and has also formed a large, inverted head and shoulders pattern.
The overall size of the typically bullish price pattern is predicting a coming $10.00 price move to the upside. Bulls need to hold the price above the $75.50 to activate the pattern.
Brent Crude Medium-Term Technical Analysis
Looking at the daily time chart, a huge head and shoulders pattern, with over $10.00 upside potential, remains a big focus of medium traders.
A move above the $77.50 level is needed to invalidate this pattern, so things could get tense for Brent over the coming days. Please be aware that bearish divergence has built on the Momentum indicator recently.