Brent Prices Stay Strong

Brent crude prices declined by 0.45% this week to $73.55 per barrel, hovering near the key support zone of $69.00-71.00. The narrowing trading range signals strong momentum and heightened downside risks. Large investors are aligning with a bearish outlook, as the United States Oil Fund (USO) reported net outflows of $132.6 million last week and another $29.0 million this week, reflecting diminished confidence in sustained price recovery.

The technical outlook remains negative, with persistent downside pressure. A breach of the $69.00-71.00 support could trigger a rapid decline toward $60.00 per barrel. For Brent to hold above this level, several factors must align: a weaker U.S. Dollar, accelerated economic stimulus in China, and escalating geopolitical tensions in the Middle East. While this combination is complex, it is not impossible. A weaker Dollar appears likely, China has announced new stimulus measures, and Middle East tensions remain elevated, which could lead to a temporary rebound, potentially pushing prices to the resistance zone of $78.00-80.00 per barrel.

However, Brent remains vulnerable to negative news, such as weak economic data from the U.S. or China, de-escalation of Middle East tensions, or discussions in the incoming U.S. administration about lifting some sanctions on Russia as part of potential ceasefire negotiations in Ukraine. These scenarios could drive prices sharply lower, and large investors are likely positioning for this outcome with short positions near $73.50.

This week is relatively quiet for the commodities market, with no major data releases expected. The American Petroleum Institute reported a 3.2 million-barrel decline in U.S. crude inventories. If confirmed by Energy Information Administration data, Brent prices could see a modest rebound to $74.00-74.50 per barrel. However, the broader outlook remains tilted to the downside.