Fundamental analytics

Brent: Oil market grows on data regarding substantial decline in oil inventories in the U.S.

Brent

Oil market has closed trading session on Wednesday in the green on the back of publishing of a very good data of industry statistics from the U.S. According to the report of the U.S. Energy Department oil inventories in the country has decreased for the week by almost 13 million barrels, that is much higher than analysts’ forecast of -2,5 million barrels. Thus weekly decline in oil inventories proved to be the biggest since September 2016. This result was reached due to substantial decline in oil import, that has dropped below the value of 3 million barrels per day. It’s one of the lowest rates of this indicator for the whole history of observations.

Inventories of petroleum and distillates also dropped for the reporting week by 0,996 million barrels and 2,4 million barrels respectively. Refineries’ load rose by 0,3% and makes 94,2%.

One more driver for oil market is situation on stock markets, where we can observe high risk appetite of investors. Traders are upbeat about the meeting of Trump and Xi Jinping on G20 summit, that will be held on 28 and 29 of June. 

In general upcoming trading week is going to be defining for oil market, since besides an important meeting of U.S. and Chinese leaders, OPEC+ meeting will take place on the 1st and 2nd of July, where a question on extension of production cuts agreement will be discussed. Therefore in the beginning of next week we should expect tangible growth of trading volatility. Vector of market movement will depend on the outcome of these two events.

On the chart the price approached to a very important intermediate resistance level (66.00), where a further mid-term vector of the quotes’ movement will be determined. In case of gaining a foothold above it we can expect further development of bullish movement with target at 68.80. In case this level triggers a pullback, the next target for the price will be the 63.30 mark.

Resistance levels: 66.00, 68.80, 72.50;

Support levels: 64.65, 63.30, 61.00.

Main scenario: Stabilizing above 66.00 and growth in direction 68.80.

Alternative scenario: False break of 66.00 and decline towards 63.30.

Positive sentiment prevails on the market, but the price approached a very stiff resistance level, where the price movement can be reversed. Therefore we should consider long-trades of the asset not higher than the 64.45 level.