View: Bullish
Target Price: $67-69/bbl
- Last week, Nov’25 Brent climbed to $67/bbl as Ukraine’s drone attacks on Russian energy sites, including the 1mb/d Primorsk terminal, intensified. This week, we expect Brent’s bullish trend to continue, with prices ending between $67 and $69/bbl. Key drivers this week include:
- Key Drivers:
- US Fed Meeting
- Geopolitical Risk in Eastern Europe
- Technicals
- Driver #1: US Fed Meeting
- Interest rate cuts are typically bullish for risk assets, including crude oil. A weakening dollar usually supports oil, as dollar-denominated crude becomes cheaper for foreign buyers, increasing demand.
- The Federal Reserve is expected to make its first interest rate cut this year in its meeting this Wednesday to boost the rapidly cooling jobs market. The meeting comes amid heightened aggression from President Trump and an uncertain economic backdrop, following a lacklustre August jobs report and the inflationary risk posed by tariffs. Moreover, the FOMC is unlikely to arrive at a consensus, with officials voicing differing views about the pace of rate cuts.
- Driver #2: Geopolitical Risk in Eastern Europe
- Renewed concerns of disruptions to Russian supply have raised the geopolitical temperature in Eastern Europe, with new developments over the weekend. In a Truth Social post on Sunday, President Trump said he is “ready” to impose sanctions on Russia, but only if NATO allies agree to halt purchases of Russian oil and impose tariffs on China. Meanwhile, on Sunday, Romania became the second NATO country to report a Russian drone incursion in its airspace.
- Unsurprisingly, given his lack of follow-through, the market is paying little heed to Trump’s threats. Moreover, with US-China trade negotiations underway in Madrid, Trump is unlikely to upset these delicate talks. Nonetheless, since Putin’s return from the Alaska summit, Russia-Ukraine drone attacks have escalated, driving a higher geopolitical risk premium and furthering supply concerns over material refinery disruptions.
- Driver #3: Technical Analysis
- Prices are entering a period of consolidation, with a descending triangle forming. Momentum is relatively neutral, with the relative strength index (RSI) trending around 50. The structural 100-day moving average is acting as short-term resistance, with prices struggling to break above this level on Monday morning.
- Should prices breach the triangle in either direction, the breakout may portend heightened volatility, especially if combined with a fundamental catalyst. We suggest keeping a close eye on trading volumes, as it often confirms trend strength.
