Last week saw Brent prices crash through the previously supportive $106 level, and in quick order test support down at $104. Having dropped almost $4 in just over 48 hours of choppy trading, oil traders have taken less than a week to break back above $106.
The market is poised for a resumption of oil exports from Libya now that an agreement has been reached with rebels over access to one of the country’s major ports. Prior to all of the troubles that Libya had suffered in the last couple of years, it was one of the larger oil exporters. This development with access to the ports should see Libyan oil exports almost triple. At the same time as the possibility of increased supply to the market, the spot price has found itself trying to break through the 50-day moving average just below $108 and the 200-DMA just above.
Although developments in Libya will increase market supply, it has been a situation the markets have been aware of for a while and as such should broadly be factored in. If the Brent crude price can close above the late-March high of $108.07, then it would give us more confidence that it can maintain its current trajectory.