XBR/USD Chart Analysis: Brent Crude Falls to Monthly Low

As the XBR/USD chart shows, today (Friday) Brent crude has dropped below $62, after rising above $64.50 as recently as Tuesday. This represents a decline of over 4% from the week’s high.

This sharp bearish movement is driven by an easing of geopolitical risks and hopes for an end to the conflict in Ukraine.

Media outlets are circulating insider reports and rumours of secret coordination between the Trump administration and Moscow on a ceasefire plan. The fall in oil prices suggests that the risk premium, which reflected fears of escalation and supply disruptions, is now being replaced by a scenario of conflict resolution, potentially including a relaxation of sanctions on Russia.

Bearish pressure is also supported by news of:
→ weakness in China’s economy, the world’s largest oil consumer;
→ rising oil inventories in US storage facilities.

Technical Analysis of XBR/USD

Since late October, oil prices have been forming a downward channel. Signs of aggressive selling include (as indicated by the arrows):
1→ a sharp drop without retracements during yesterday’s trading session;
2→ a breach of the $62.60 support level with a bearish gap.

In this context, it is reasonable to suggest that:
→ Brent crude could move towards the lower half of the channel;
→ the channel’s median may act as resistance.

Furthermore, if fundamental indicators confirm progress towards ending the war in Ukraine, the downward trend may continue. This does not rule out a scenario in which Brent tests the lower boundary of the channel, around the psychological $60 per barrel mark.

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