What's happening with the brent crude oil price? And where will it go next?

The oil price is a slippery thing to predict in 2024 so far. With ever-fluctuating supply and demand, it seems to be flummoxing even the experts.

Goldman Sachs outlook on oil

On January 8^th, Goldman Sachs announced that ‘oil prices may be soft in 2024 amid surprisingly ample supply’.

Unrest spikes oil price

Then, on January 10th and January 11th, global crude oil prices rose to over $78 per barrel on both days, largely off the back of Libya recently stopping all oil production amid political unrest, and similar turmoil ongoing in the Red Sea. 

Barclays outlook on oil

But it seems that Goldman Sachs is not alone in its thinking. Despite the sharp increase in oil prices, Barclays said on January 15^th that they too had lowered their expectations for oil, reducing their forecast significantly of the average crude oil price in 2024 from $93 per barrel of crude oil to $85.

So, where to from here for the oil price?

On the one hand, geopolitical tensions remain high in several of the areas considered the world’s biggest oil-producers traditionally. But on the other hand, places like the US may pump more supply than expected into the market in 2024.

So, with conflicting reports from the market experts and the headlines, what’s an investor to believe? And where will the oil price go from here?

Technical analysis of the brent crude oil chart

Luckily, technical analysis may be able to clarify what news reports and fundamental analysis may not. According to Invezz’s analyst Crispus Nyaga, this is what’s in store for brent crude from a TA perspective:

Nyaga thinks that brent crude oil is likely to stay pessimistic for now.

The MACD indicator has moved below the neutral point of zero. Therefore, the outlook for Brent is bearish for now, with the next key support point to watch will be $72.40, the lowest point on December 13th. A break below that price will see it move to the next point at $70.20, the lowest point on March 20th."

A second indicator: oil inventory balances

According to Goldman Sachs, the most telling signs to watch are inventory balances:

And, according to Energy Intelligence, crude oil inventories are looking stacked, especially in the US. On January 10^th, the fuel insights company said that a surprise increase in US crude and product stocks has helped push oil futures lower”.