Brent oil has backed off from one-week highs

• Brent has backed off from one-week highs, possibly due to overbought conditions, as shown by the relative strength index.
• Dips could be short-lived, courtesy of falling US inventories, looming Iran sanctions.

Currently, a barrel of Brent oil is changing hands at $79.31, having hit a 7-day high of $79.51 yesterday.

The pullback is likely associated with the intraday relative strength index (RSI) reporting overbought conditions. Further, Russia's Novak has reportedly said that his country has potential to raise output. As a result, oil prices may dip further.

However, the dips could be short-lived as Hurricane Florence is expected to hit US East Coast on Friday, adding to supply concerns associated with the looming sanctions on Iran. Also, the evidence of falling US inventories will likely put a bid under oil. For instance, the American Petroleum Institute (API) reported yesterday that the US crude inventories fell by 8.6 million barrels in the week to September 7 to 395.9 million barrels.

Brent Technical Levels

Resistance: $79.70 (previous week's high), $80.00 (psychological level)

Support: $79.25 (10-hour moving average), $78.62 (20-hour moving average)