Brent is being pulled from every direction. White House, with the help of a small number of countries, is trying to prevent oil from rising to 3 digit levels, OPEC+ members want higher prices to continue while the new omicron variant and hawkish FED add more unknown to the table.
After the announcement from the US about reserve selling to decrease the price pressures brent entered a short-term bearish trend, The omicron variant news add these selling pressures and with OPEC’s decision to add another 400k barrels a day to supply, brent found itself just over 65 support. But in the next months might change the outlook positively. JP Morgan and JBC energy reported that OPEC members’ capacity is nearing the max, which is very bullish if accurate. JP Morgan even set a price target for 2023, $150. With that in mind, there is still no deaths reported from the omicron variant and it may be milder than the delta variant, but still unknown for the time being.
Possible bearish news may come from Iran as nuclear talks started smoothly and from the omicron variant if discovered deadlier than expected. A more hawkish FED might limit the demand increase too.
67,40-69,30 zone and 65 levels are the key supports over the short to medium term. If this supports hold 73-75-78 levels can be followed as major resistance levels. A possible head and shoulders formation may form with a second shoulder close to 78.
Below 65 will support the bearish case and might trigger sharper declines.