Fundamental analytics

Brent: Brent crude is being traded at the area of 7-month lows

Brent

Oil market remains under very stiff pressure on the back of increased tensions in trade relationship between USA and China. Brent crude grade today has renewed 7-month lows and keeps priority in favor of further decline of the quotes. Investors have concerns, that on the back of escalating situation in international trading fuel demand will decline shortly, that may drive to market imbalance towards oversupply.

Locally the quotes might get some support from the U.S. industry data. Yesterday API report has recorded decline in oil inventories in the latest week by 3,4 million barrels. U.S. Energy Department report is forecast to show decline by 2,8 million barrels. Therefore it’s likely, that actual data will be released a bit better than market expectations providing support to oil prices. But we shouldn’t expect tangible growth of the quotes while global economy growth forecast is worsening.

On the chart we see attempt of bears to gain a foothold below the 58.75 level, that would be a solid signal of continuation of downward movement in direction of 58.00 and 57.00 levels. But if buyers manage to move the price above 58.75 the priority might be shifted to development of upward movement in direction of the 60.10 level.

Resistance levels: 60.10, 62.30, 64.70;

Support levels: 58.75, 58.00, 57.00.

Main scenario: Stabilizing below 58.75 and decline towards 58.00.

Alternative scenario: Settling above 58.75 and growth towards 60.10.

Negative fundamental background retains on the market, therefore we set priority on short-trades seeking them in the vicinity of 60.10 level. We can consider more aggressive short-positions from the 58.75 level.