Fundamental analytics

Brent: Brent crude is being traded below $60


Oil market is being traded short amid release of growing U.S. crude stocks data and worsening situation on the stock markets. Yesterday’s trading session was closed for Brent with decline by more than 2,7%, WTI was down 3,3%. Today Brent shows the result of -0,6%, WTI -0,5%. 

According to API report U.S. crude inventories rose by 5,95 million barrels in the latest week. Energy Information Administration report which is due today is expected to show growth of crude stockpiles by 1,5 million barrels. API data shows, that most likely actual data will be worse than market expectations, that may increase pressure on oil. The increase added to concerns about oil oversupply after Reuters reported that Russia, the world’s second-biggest producer, was unlikely to support deepening output cuts when the Organization of the Petroleum Exporting Countries (OPEC) meets on December 5-6 in Vienna.

Substantial pressure on the oil quotes is produced by the situation on stock markets, where major indices are traded in the red. Risk appetite declines amid serious escalation of relationship between USA and China. Investors are concerned, that conflict around Hong Kong may slow down trade negotiations between two countries.

On the chart we note strengthening of bearish signals. The price broke support at 60.00. The next target for price action is 58.50.

Resistance levels: 61.40, 62.50, 64.00;

Support levels: 60.00, 58.50, 57.00.

Main scenario: Stabilizing below 60.00 and decline towards 58.50.

Alternative scenario: Settling above 60.00 and growth towards 61.40.

Fundamental background is negative. Bearish signals prevail on the chart. We consider shorts at 60.00 and 61.40.

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