BRN falls to mid-$80s after erasing Sept gains

After the sharpest single day drop (-5.48% on Oct. 2) in Oil prices this year, BRN bulls are attempting to stabilize around $83/bbl.

Uncertainty regarding the macro-economic “health” of the major oil consuming nations, such as the US and China, has exert significant downward pressure on the “black gold”.

OPEC+ has officially extended its production cuts, despite demand-side fears, providing moderate support to the BRN bull’s efforts in bringing the price back above the $85/bbl.

Both Russia and Saudi Arabia will maintain their voluntary production caps intact until end-2023 at:

• Russia: 1 million bbl/day
• Saudi Arabia: 300,000 bbl/day

Investors now will closely monitor any market developments that may shed light on the potential level of the largest oil consumers’ macro-economic resiliency.

Oil traders may find a tricky task in interpreting today’s US jobs report.

A stronger-than-expected NFP report that bolsters the US dollar may mean Brent moves closer to $80/bbl. However, oil bulls may find solace from resilient US hiring that supports demand for the commodity in the world’s largest economy.

On the other hand, if US hiring momentum starts to slip, that may soften the US dollar while offering some relief for oil bulls heading into the weekend. Still, oil markets will be aware that a weaker labour market may ultimately undermine US oil demand.

From a technical perspective …

BRN is currently trading below the 50-period SMA ($87.95) fir the first time since July, which could possibly indicate a temporary downtrend.

As long as BRN can keep its head above the 100-period SMA, situated below ($82.39), that may still keep hopes for an oil price recovery intact.

Still, the Relative Strength Index (RIS) is adjacent to the lower border at 31.01 (<30 – oversold), suggesting a possibility for a technical pullback.