By Ion Jauregui – Analyst at ActivTrades
Bearish pressure is intensifying in the oil market, with Brent crude leading the liquidation among major investment funds. The expiration of U.S. tariff exemptions on August 1st, combined with a global economic slowdown, has triggered a wave of risk aversion across energy commodities.
Funds Exit Oil: Alarming Figures
According to the latest data from the CFTC and ICE, hedge funds cut their net long positions in Brent by 11,352 contracts, bringing the total down to 227,393, the lowest level since April. For West Texas Intermediate (WTI), the decline was even sharper—over 10,000 contracts, reducing the net exposure to 86,088.
The bearish trend extends to refined products. U.S. diesel net positions fell to 38,945 contracts, although pure long positions reached 54,053, the highest level since February. In contrast, European gasoil showed relative strength as a safe haven, with long contracts increasing by 7,632 to 132,133—the highest level in more than three years.
Brent Technical Analysis: Critical Zone Under Pressure
From a technical perspective, Brent failed to break through the key $80 resistance level on June 23rd, which intensified selling pressure. Throughout July, prices have consolidated within an accumulation zone around $68, close to current levels. The year’s lows, recorded in May at $58.16, suggest a structural support around $62.41.
The loss of the 50- and 100-day moving averages reinforces the bearish bias. Should the current support break, Brent could swiftly move toward $64, a key technical support zone. Conversely, if prices hold above this level, a rebound toward the control zone around $72 could follow.
Technical indicators support the pessimistic outlook: the RSI stands at 48.32, in neutral territory but lacking upward momentum, while the MACD shows a bearish expansion, potentially signaling further downside unless strong buying emerges in the short term.
Valuations in Question
Despite the recent correction, the energy sector within the S&P 500 maintains an estimated P/E ratio of 15, above its historical average of 11–12, though still below the broader index average (~26×). This raises the classic dilemma: is this a value opportunity or a value trap in a structurally weakening demand cycle?
Conclusion
The oil market is facing a double challenge: weakened fundamentals and bearish technical signals. With institutional flows pulling back, macro uncertainty rising, and momentum indicators flashing red, caution is warranted.
The current levels may mark a strategic inflection point—or simply the prelude to deeper declines.
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La información facilitada no constituye un análisis de inversiones. El material no se ha elaborado de conformidad con los requisitos legales destinados a promover la independencia de los informes de inversiones y, como tal, debe considerarse una comunicación comercial.
Toda la información ha sido preparada por ActivTrades ("AT"). La información no contiene un registro de los precios de AT, o una oferta o solicitud de una transacción en cualquier instrumento financiero. Ninguna representación o garantía se da en cuanto a la exactitud o integridad de esta información.
Cualquier material proporcionado no tiene en cuenta el objetivo específico de inversión y la situación financiera de cualquier persona que pueda recibirlo. La rentabilidad pasada y las estimaciones no sinónimo ni un indicador fiable de la rentabilidad futura. AT presta un servicio exclusivamente de ejecución. En consecuencia, toda persona que actúe sobre la base de la información facilitada lo hace por su cuenta y riesgo. Los tipos de interés pueden cambiar. El riesgo político es impredecible. Las acciones de los bancos centrales pueden variar. Las herramientas de las plataformas no garantizan el éxito.
Bearish pressure is intensifying in the oil market, with Brent crude leading the liquidation among major investment funds. The expiration of U.S. tariff exemptions on August 1st, combined with a global economic slowdown, has triggered a wave of risk aversion across energy commodities.
Funds Exit Oil: Alarming Figures
According to the latest data from the CFTC and ICE, hedge funds cut their net long positions in Brent by 11,352 contracts, bringing the total down to 227,393, the lowest level since April. For West Texas Intermediate (WTI), the decline was even sharper—over 10,000 contracts, reducing the net exposure to 86,088.
The bearish trend extends to refined products. U.S. diesel net positions fell to 38,945 contracts, although pure long positions reached 54,053, the highest level since February. In contrast, European gasoil showed relative strength as a safe haven, with long contracts increasing by 7,632 to 132,133—the highest level in more than three years.
Brent Technical Analysis: Critical Zone Under Pressure
From a technical perspective, Brent failed to break through the key $80 resistance level on June 23rd, which intensified selling pressure. Throughout July, prices have consolidated within an accumulation zone around $68, close to current levels. The year’s lows, recorded in May at $58.16, suggest a structural support around $62.41.
The loss of the 50- and 100-day moving averages reinforces the bearish bias. Should the current support break, Brent could swiftly move toward $64, a key technical support zone. Conversely, if prices hold above this level, a rebound toward the control zone around $72 could follow.
Technical indicators support the pessimistic outlook: the RSI stands at 48.32, in neutral territory but lacking upward momentum, while the MACD shows a bearish expansion, potentially signaling further downside unless strong buying emerges in the short term.
Valuations in Question
Despite the recent correction, the energy sector within the S&P 500 maintains an estimated P/E ratio of 15, above its historical average of 11–12, though still below the broader index average (~26×). This raises the classic dilemma: is this a value opportunity or a value trap in a structurally weakening demand cycle?
Conclusion
The oil market is facing a double challenge: weakened fundamentals and bearish technical signals. With institutional flows pulling back, macro uncertainty rising, and momentum indicators flashing red, caution is warranted.
The current levels may mark a strategic inflection point—or simply the prelude to deeper declines.
*******************************************************************************************
La información facilitada no constituye un análisis de inversiones. El material no se ha elaborado de conformidad con los requisitos legales destinados a promover la independencia de los informes de inversiones y, como tal, debe considerarse una comunicación comercial.
Toda la información ha sido preparada por ActivTrades ("AT"). La información no contiene un registro de los precios de AT, o una oferta o solicitud de una transacción en cualquier instrumento financiero. Ninguna representación o garantía se da en cuanto a la exactitud o integridad de esta información.
Cualquier material proporcionado no tiene en cuenta el objetivo específico de inversión y la situación financiera de cualquier persona que pueda recibirlo. La rentabilidad pasada y las estimaciones no sinónimo ni un indicador fiable de la rentabilidad futura. AT presta un servicio exclusivamente de ejecución. En consecuencia, toda persona que actúe sobre la base de la información facilitada lo hace por su cuenta y riesgo. Los tipos de interés pueden cambiar. El riesgo político es impredecible. Las acciones de los bancos centrales pueden variar. Las herramientas de las plataformas no garantizan el éxito.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.