Brent Crude has bounced back from its low of $58.40 in April-May and is heading towards the 200-day moving average, which is at $65.75. This average has been a tough barrier for recent price increases. If it breaks through this level, we could see bigger gains ahead. Meanwhile, last week’s low of $59.80 is the immediate support point. Société Générale’s FX analysts are monitoring these movements as oil approaches this critical level.

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Brent Crude Price Dynamics

Brent Crude has recovered from its April-May low of $58.40 and is now nearing a key resistance level at the 200-day moving average of $65.75. This average has previously hindered attempts for prices to rise. If it breaks above $65.75, we might see significant price increases, making call options with strike prices around $67 and $70 enticing for the upcoming weeks. Supporting this potential rise is the recent EIA report, which revealed a surprise decline in crude inventories by 4.2 million barrels, indicating higher demand. For now, keep an eye on last week’s low of $59.80 as the immediate support. However, if resistance at this level holds, traders might look into put options to capitalize on a price drop, especially if it falls below $59.80. The CBOE Crude Oil Volatility Index (OVX) is around a moderate 34, making option premiums a viable way to manage risks in this uncertain market. This allows traders to prepare for either a breakout or a setback at this crucial point. Adding to the market’s uncertainty, the Federal Reserve is experiencing heightened political pressure after receiving subpoenas from the Department of Justice. This follows the latest jobs report showing 199,000 new jobs but a rise in the unemployment rate to 3.9%. Such political influences could disrupt expectations for monetary policy and increase volatility in the US dollar, which would directly affect oil prices. Simultaneously, we’re noticing a drop in speculative interest in other markets. Meme coins like Dogecoin and Shiba Inu continue their decline after a brief increase on January 4, suggesting that traders are avoiding risky assets. This broader cautious approach could hinder the price of crude oil and limit sustained breakout chances. Create your live VT Markets account and start trading now.

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