Fundamental analytics

Brent: News over a probable easing sanctions on Iran has imposed tangible pressure on oil market


Oil market has closed trading session on Wednesday tumbling more than 2% despite U.S. Energy Department reported substantial draw down in crude stocks ( -6,9 million barrels against the forecast of -2,7 million barrels). Bloomberg agency message also weighed in on the market reporting Donald Trump this week has discussed a question on resumption of negotiations with Iranian leader Hassan Rouhani and easing sanctions. This idea was supported by Treasury minister Steven Mnuchin, but was firmly opposed by national security adviser John Bolton, who was consequently dismissed from service. Investors are concerned that easing Iran sanctions may drive to growth of supply on oil market.

Today International Energy Agency (IEA) has delivered its monthly report. According to published data agency has kept its forecast on growth of global oil demand on the level of 1,1 million bpd. Let’s remind that earlier Goldman Sachs analysts has lowered forecast on this indicator from 1,1 million bpd to 1,0 million bpd. Traders were negative about information that in 2020 growth of oil supply beyond OPEC will rise from 1,9 million bpd to 2,3 million bpd. Decline of the market continues.

According to TASS reports OPEC+ joint ministerial monitoring committee will discuss during its meeting the question of insufficient oil production cuts by a number of cartel’s countries, Iraq and Nigeria in particular. Earlier Russia’s Energy Minister Alexander Novak claimed, that one of the major topics of the meeting is going to be the question of lowering energy demand.

On the chart, after unsuccessful attempt of bulls to settle above the 62.30 level, quite a strong downward wave is developing with the closest target at 59.30 level. At this mark we can expect building of reversal formation and development of corrective movement. 

Resistance levels:  60.90, 62.30, 64.80;

Support levels: 59.30, 57.50, 55.50.

Main scenario: Decline towards 59.30 and correction towards 60.90.

Alternative scenario: Break of support at 59.30 and decline towards 57.50.

Negative sentiment prevails locally on the market. On the chart the price approaches to important support level 59.30, where we can consider short-term long-positions for this asset.