Brent quotes are falling for the third consecutive trading session, with the price currently at 74.88 USD. More details in our analysis for 4 February 2025.
Brent forecast: key trading points
- Washington postponed tariffs on goods from Canada and Mexico
- China imposed 10% tariffs on US oil
- A slowdown in Chinese factories fuels concerns about oil demand
- Brent forecast for 4 February 2025: 74.00 and 73.10
Fundamental analysis
Brent prices are falling after Washington’s decision to pause new tariffs on goods from Canada and Mexico. The sellers are testing the key support level at 75.00 USD. A breakout below this level could add to the downward momentum, leading to a deeper correction.
Canada’s Prime Minister Justin Trudeau said the US agreed to temporarily halt tariffs in exchange for tougher border controls from Ottawa. Tariffs on Mexico were also postponed for a month, easing geopolitical tensions somewhat but not yet helping oil prices recover.
The trade policy of Donald Trump’s administration maintains high volatility in the oil market. Fundamental factors, including the supply and demand balance, temporarily faded into the background, giving way to trade disputes as the primary price driver. Although the postponement of tariffs for Canada and Mexico has somewhat improved the market sentiment, the Brent forecast does not yet point to price growth.
Prices are under additional pressure from China’s decision to impose 10% tariffs on US oil. Additionally, concerns about global oil demand are rising amid a slowdown in Chinese factories in January. As the largest oil importer, China plays a key role in shaping global demand, and any signals of weakness in its economy negatively impact the market.
Brent technical analysis
Brent prices continue to move within the short-term downtrend. After buyers attempted to test the EMA-285, prices fell sharply, confirming the bearish pressure on the market and the strength of the current downtrend. The sellers are now actively testing the crucial support level at 75.00 USD. According to the Brent forecast for 4 February 2025, a breakout below this level will confirm the continuation of the bearish momentum and open the door for a further decline to 73.10 USD.
The Stochastic Oscillator also confirms a further downward movement. The indicator lines bounced off the resistance level, and the recent intersection of the %K and %D lines from top to bottom indicates a further fall. Amid the general downtrend, such oscillator signals increase the likelihood of a breakout of the crucial 75.00 USD level.
An alternative scenario is possible if prices break above the upper boundary of the descending channel and consolidate above 77.00 USD. In this case, the buyers could increase the pressure on the market, leading to the formation of a Double Bottom reversal pattern and growth in Brent prices to 79.50 USD. However, to implement this scenario, a rapid price rise is required and buyers should keep the key support level intact.
Summary
The oil market remains under pressure due to trade risks and uncertainty about global demand. While fundamental factors give way to political decisions, Brent quotes retain the potential for further decline. Today’s Brent analysis indicates the development of the downtrend, with sellers now testing the crucial support level at 75.00 USD. Its breakout will open the way for a decline to 73.10 USD. The alternative scenario suggests price consolidation above the upper boundary of the bearish channel and growth to 77.00 USD if buyers defend the key support level.
Source: Roboforex
