Oil Traders Under Pressure, as Seasonal Effect on Crude Oil Markets Come to Play

Traders have been struggling of late to keep Brent crude prices above the $43.50 price support level, after touching one month low, as Brent crude prices breached the crucial support area around the $45 price level. Sell-offs also intensified on increased profit taking by traders.

It should be noted that Crude prices of late have been experiencing low volatility in the markets overall. However, the recent U.S Job reports recently released is expected to keep the price of crude above the $40 level price level (Brent Crude) in the near term and probably trigger more trading activity in the fragile energy market.

Also the recent surge in the US dollar ahead of the European Central Bank (ECB) rate decision is posing a most massive threat to the short-term view of crude oil prices.

Crude oil traders are aware, on the recent rebound on the US dollar Index, as squeezed out momentarily the steady bullish run on the energy derivative, as the greenback’s gain is relatively negative effect on the commodity.

Also, there is a seasonality effect on the black liquid derivative, including the U.S refinery maintenance period and end of the driving season that will both be weighing on oil demand in September, perhaps spooking the markets, even more, are reports that Iraq was getting complacent on its commitments under the OPEC+ agreement.

While the USD move and Iraq news may have led to some profit-taking, underlying supply/demand dynamics and the just recent impressive economic data from the world’s largest economy continue to suggest a tightening market and a move towards the $45 per barrel in the case for Brent oil.

Crude oil prices now seem to be in a price consolidation phase after a positive melt-up over the past eight weeks.

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