Fundamental analytics

Brent - News background on the asset remains neutral


On Tuesday oil was traded with tangible volatility, but eventually closed the day with minimal fluctuation in relation to the opening price.

Serious factor to support the market was new forecast from the US Energy Department, that was published the day before. It’s expected, that level of average daily output in 2019 will make 12,3 million barrels, that is 0,9% lower than February forecast and output level of 2020 will make 13,03 million barrels, that is 1,3% lower than previous forecast. Alongside with this, in the US Energy Department they rose the forecasts on the oil price in 2019 for WTI upto $56,13 for a barrel and for Brent upto $62,78 for a barrel.

At the end of the trading day serious pressure on oil market was produced by the situation on equity markets. The major European indices closed the day in the the red. American stock market closed mixed. Oil is related to risky assets, therefore it correlates quite closely with the direction of equity markets' movement.

Today weekly report of the US Energy Department on inventories and output is going to be in the investors’ focus. The day before API published the data, reporting crude oil inventory drop by 2,58 million barrels. Therefore today upbeat expectations prevail regarding the issue of the Energy Department report. Analysts expect growth of inventory by 2,655 million barrels. Correspondingly any data lower than predicted level can provide serious support to oil market.

On the chart a sideways channel continues to develop so far with boundaries at the levels 64.50-67.50. Now buyers are trying out the upper wall of price channel but unable to break it. Correspondingly we consider a priority so far an option with development of local retracing movement in direction of the 64.50 level. Alternative option is break of the 67.50 level, that would be a solid signal for further development of bullish wave with target at 70.00.

Resistance levels: 67.50, 68.00, 70.00;

Support levels: 66.50, 65.50, 64.50.

Main scenario: Reversal at the 67.50 level.

Alternative scenario: Gaining a foothold above 67.50 and recovery towards 70.00.

News background on the asset remains neutral, at the same time on the chart a sideways channel is in progress in the 64.50-67.50 range. Therefore today we can consider a possibility of short-trades opening during growth of the price towards 67.50.