Fundamental analytics

Brent: Oil market retains bullish trend.

Brent

Oil market closes in the green for the third consecutive week on the back of support of a bunch of important fundamental factors. The main driver for growth, of course, is OPEC actions directed to curb crude output level. At the same time tightening of supply took place not only due to directed actions taken by Saudi Arabia and other countries of the cartel, but due to forced cuts of production capacities in Libya and Venezuela.

Positive influence of commodity sector was imposed by the situation on stock markets and movement dynamics of the US dollar.The main stock indices retained bullish trend in their movement reflecting high investors’ appetite for the risk, that always provides support to crude oil. Dollar index continues to move downwards, that makes all commodities cheaper for investors, who own capital in other currencies. New trading week oil market started with decline by 0,9% for WTI and by 0,8% for Brent. Pressure on the price was put by the comments of Russian Minister of Finance Anton Siluanov. On weekend he claimed, that Russia and OPEC countries can boost production in the second half of the year to reclaim the lost market share.

Investors expressed negative reaction on published on Friday evening Baker Hughes statistics, that showed growth of oil rig count by two units, that may indicate increase of production in the US in medium term.

During this week investors will focus on the US industry statistics (API report on Tuesday and US Department of Energy report on Wednesday) and also news of geopolitics linked to the US-China trade talks, trade dispute of USA and Europe and also situation in Libya and Venezuela.

On the chart local decline of the quotes notwithstanding, upward price channel remains to be actual and within it we may reckon on further recovery of oil prices towards the 72.00 level and higher. At the same time key support stands at the 70.00 level now, where it’s reasonable to consider purchases of the asset.

Resistance levels: 71.60, 72.00, 74.00;

Support levels: 70.50, 70.00, 68.80.

Main scenario: Growth towards 72.00.

Alternative scenario: Sideways channel within the 70.50-71.60 range.

A neutral sentiment is established on the market right now, that facilitates development of corrective movement. Bullish trend remains to be actual, therefore intraday we should give preference to long-trades seeking them in the range between the levels 70.00 and 70.50.


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