Sub-$75/b Brent nearing key support Sub-$75/b Brent nearing key support Sub-$75/b Brent nearing key support

Sub-$75/b Brent nearing key support

Commodities 3 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  Crude oil continues to trade lower even as sentiment in equities and other asset classes rebounds. At issue are large leaps forward in both US and Opec production.

Crude oil continues to trade lower despite the improved sentiment seen across other markets where stocks have recovered and the dollar has weakened.The USD softness is due to renewed Brexit hopes lifting sterling while USDCNY has retraced from the important 7.00 level after China’s leadership signaled the roll-out of further stimulus measures as economic data continue to disappoint.

WTI crude is testing $65/barrel while Brent has broken below the important $75/b level to challenge the 200-day moving average at $74/b. The market has reacted negatively to yesterday's news from the Energy Information Administration that US production in August jumped by 3.8% to reach a fresh record of 11.346 million barrels/day.

US oil production has now risen by an incredible 2.1 million barrels/day year-on-year, in the process surpassing Russia which produced a post-Soviet high of 11.2 million b/d in August. 

If that was not enough, Reuters then released its monthly Opec production survey which showed the group's output rising to the highest level seen since 2016 despite Iran sanctions. Also on the Iran front, we now see reports discussing US waivers potentially being granted to India and South Korea, thereby reducing sanctions' impact on Iran's ability to produce and export crude oil.
US production
These developments have further reduced the potential impact of US sanctions against Iran when they come into force next week. WTI crude is now looking for support ahead of $64/b, with a break below carrying the risk of an even deeper correction than the one already witnessed. Brent crude oil, meanwhile, has dropped below $75/b with the next level of support being the 200-day moving average at $74/b.
Brent crude
Source: Saxo Bank

Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.