Brent Crude – Is the oil rally running on fumes as Brent nears $100?

• Oil rally is not a repeat of last year
• $100 a major psychological level
• Divergences appearing

Oil prices are increasingly hitting the headlines, with Brent crude coming within five dollars of triple figures which will naturally bring back bad memories of last year’s price surge.

It is worth noting that, while oil could top $100, this is very different from 2022 and is largely being driven by OPEC+ tipping the market into deficit which is unlikely to be the long-term plan.

What’s more, there may be some early signs that the oil rally is running on fumes as we get closer to $100, perhaps a sign that traders view it as a major psychological hurdle. That’s what it proved to be in October and November last year, the last time Brent traded around these levels.

Are technical divergences appearing?

It’s still very early to label what we’re seeing as a divergence as it’s not yet clear that the price has made a new high – the rally could continue after this is published, for example, or tomorrow.

BCOUSD Daily

Source – OANDA on Trading View

But the fact the price has surpassed the last peak after breaking above the bullish flag formation and both the stochastic and MACD look sluggish is perhaps an early red flag. It will certainly be one to watch if the price keeps rising towards $100 which has naturally become the latest obsession.

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