Fundamental analytics

Brent: Oil quotes slide on concerns of delay in U.S.-China trade deal


Oil market has closed trading session on Wednesday with quite a good growth (Brent +2,2%, WTI +2,8%) due to release of positive data on oil inventories by Energy Information Administration. According to the report crude stocks rose by 1,8 million barrels in the week against the forecast of +1,54 million barrels.

Today market again entered red zone of trading amid decline of the major world indices and investors’ escape from the risk. Traders are concerned about escalation of tensions in relationship between USA and China. More mass media referring to cognizant sources write that trade talks are close to failure as the parties are unable to find a compromising solution regarding earlier applied trade tariffs. Probability of signing the first part of agreement is moving to zero. Yesterday Donald Trump again criticized Chinese position during negotiations and claimed, that so far he is not willing to sign a trade deal. The trade war between the world’s two biggest economies has impacted global growth prospects and dominated the outlook for future oil demand.

Therefore oil price most likely will extend losses today.  

On the chart price remains in the sideways channel 60.00-62.50. We can expect decline of the quotes within this horizontal channel with target to retest 60.00 level.

Resistance levels: 61.40, 62.50, 64.00;

Support levels: 60.00, 58.50, 57.00.

Main scenario: Decline towards 60.00.

Alternative scenario: Growth towards 62.50.

Market sentiment is moderately-negative. Bearish signals prevail on the chart. We consider short-positions from 61.40.

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