Investors were awaiting a resolution to the ongoing trade tensions between China and the US following Donald Trump’s recent meeting with Xi Jinping. Brent bulls are counting on sanctions against Russia, while bears are counting on a record surplus. Both sides needed signals, but none were delivered. Let’s discuss this topic and develop a trading plan.
The article covers the following subjects:
Major Takeaways
- The US and China did not discuss crude oil.
- Hedge funds were wrong in their forecasts.
- Beijing continues to build up oil reserves.
- Purchases of Brent above $65.35 and sales below $63.8 are relevant.
Weekly Fundamental Forecast for Brent
“We didn’t actually discuss oil.” That is how Donald Trump described his meeting with Xi Jinping, leaving hedge funds with damaged reputations. Notably, two leaders did not discuss sanctions against Russian oil exports. In the week leading up to October 28, speculators reduced their short positions on Brent at a record pace after Russia’s Lukoil and Rosneft were blacklisted by the US. However, the situation proved to be less dire than initially assumed.
Short Positions on Brent
Source: Bloomberg.
When lions fight, even leopards prefer to stay out of trouble. In this case, the “lions” are Brent sellers, equipped with rumors of a record oil market surplus in 2026, and buyers counting on sanctions against Russia. The “leopard” is OPEC+. The organization has decided to increase production by 137,000 barrels in December, which is equivalent to the increases seen in October and November. After that, the figure will remain at the same level in the first quarter. The alliance cites seasonally weak demand at the beginning of the year, but in fact, the main reason is uncertainty.
The forced ousting of one of the largest oil producers from the market is certainly not something to be taken lightly. Following Indian firms, Chinese companies are also reducing their Russian crude purchases, fearing secondary Western sanctions and the example set by Shandong Yulong Petrochemical. The company’s problems are causing others to become nervous. According to Rystad Energy estimates, about 400,000 bpd, or 45% of China’s total Russian oil imports, are affected to some extent by the buyers’ strike.
China’s Oil Imports From Russia
Source: Bloomberg.
The US Department of Energy has offered China American oil in case it refuses to buy Russian crude. In the first nine months of 2025, China increased its oil imports to an average of 11 million bpd. Approximately 1–1.2 million bpd of this amount was stockpiled as part of the country’s energy security policy. Around 70% of China’s domestic oil demand comes from abroad.
If China were guided solely by economic considerations, the US could certainly take Russia’s place. According to government data, the US produced 13.8 million bpd in August, notching the third consecutive monthly record. However, China’s priorities extend beyond the economy. It has a firm grip on the US by controlling rare earth elements and can afford to flout Western sanctions. The question is, will it do so?
Weekly Trading Plan for Brent
Therefore, Donald Trump’s meeting did not clarify the situation on the oil market but rather confused investors even more. Brent can rise amid restrictions on Russian crude exports or fall on expectations of a surplus. Long positions can be opened if Brent quotes reach above the swing high of $65.35 per barrel. At the same time, short positions can be considered if the price falls below $63.8.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of UKBRENT in real time mode
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