Fundamental analytics

Crude oil declines in correction despite the release of quite positive report by US Department of Energy



Solid bearish trend is developing for natural gas and the price within it was able to renew many-year troughs having declined towards the 2.500 mark, where the price was absent for more than 2,5 years. Just for previous day the gas quotes dropped by more than 2,1% and today decline makes about 0,5%, besides downward tendency continues.

Fundamentally the main driver for development of bearish wave on the market was substantial decline of gas consumption volumes in USA due to completion of the heating season. This is indicated by the data of US Department of Energy, that showed increase of natural gas inventories for two consecutive weeks. Today, correspondingly, market expects release of new data from US Department of Energy, that can change the direction of price movement.

On the chart we see full-rate break of many-year low at the 2.520 level, that is a signal of bearish trend continuation. But we should consider potential entry points to the market only after forming of retracing movement. The most safe entry points reside at the 2.600 region. But also there is a probability of price pullback from the 2.540 level.

Our recommendations: Shorts from 2.540.


Crude oil declines in correction despite the release of quite positive report by US Department of Energy, that recorded a decline in oil inventories by 1,4 million barrels (the forecast was -1,2 million barrels). It’s the first decline of this indicator for the last four weeks, when overall volume of inventories increased by more than 17 million barrels. From our point of view, the main driver for development of corrective movement now is not as much fundamental as technical factors. The day before price has reached new annual peaks, where many investors started to close long positions on this asset, that naturally drove to decline in the price of the asset. Fundamentally a certain pressure on the price can be imposed by claims of Russian representatives about probable pump of production in the second half of the year, that virtually can mean cancelling of the Vienna agreement terms, that was secured by OPEC to control the supply volume on oil market during the last years.

Alongside there are solid support factors on the market, that will restrain the scale of oil prices decline. First of all, investors are positive about signals of the White House regarding probable securing of the trade agreement between USA and China by the end of May-beginning of June. This agreement can improve the situation in global economy substantially, that will boost demand for energy carriers. Secondly, risks of tangible reduction in oil supply from Libya and Venezuela preserve on the market. The Chairman of Libyan Oil Company said the day before, that oil export volume can drop by 1,2 million bpd as a result of hostilities.

On the chart no global changes took place for the past 24 hours. The price continue its movement within long-term upward channel. At the same time one more bullish channel is formed locally, that clearly shows the priority of the current price movement. Correspondingly intraday we should give preference to long-trades of the asset seeking them at the 70.85 level.

Our recommendations: Longs from 70.85.

New articles