Fundamental analytics

Oil market recovers on the back of rising stock markets and news from China.

Brent

NG

Natural gas price remains under pressure despite the positive data from US Department of Energy published last week. According to department’s reports growth of gas inventories for the reporting week made the total of 100B while expected growth of the indicator was 104B. But weather conditions in the United States so far facilitate a decline in real consumption of this commodity, that naturally puts pressure on its cost. In this situation bulls can just hope for establishing of a warmer weather, that will increase gas demand, which is used for power generation and also for growth of the U.S. LNG export.

On the chart the price has probed the local resistance level 2.610, that we’ve denoted in the previous review. The price bounced to the downside and in view of this we consider a scenario with decline of the quotes in direction of the 2.520 level as prevailing. At this moment it’s the strongest support level for the price, therefore we can expect forming of retracing movement from this region.

Our recommendations: Short-trades from 2.570.

 

Brent

Oil market extended gains yesterday due to hiking stock markets and positive news from China. According to published data China has raised oil import in April despite the slowdown in economy growth. Growth comparing to the same period of last year made 10,8%. Thus concerns of investors, that escalation of trade dispute between USA and China will drive to substantial reduction of oil consumption level has somewhat eased.

Nevertheless the conflict between USA and China remains in the spotlight for investors. A day before Trump has claimed, that he can raise tariffs for Chinese goods once again if parties fail to reach a compromise in trade agreement. Stock markets have ignored new threats of U.S. President, but capabilities of their further recovery still look limited.

Partial stabilization of the situation in the Middle East, after a series of armed attacks on oil vessels and oil pipelines of Saudi Arabia, also facilitates recovery of oil prices. Nevertheless an issue with american sanctions remains to be unresolved and Tehran shortly can take actions to escalate the conflict once again trying to win positive outcome from this issue.

On the chart the price has approached to the important resistance level 68.80, from where we can expect resuming of downward movement. The targets will be at the 67.30 and 66.00 levels. Correspondingly we can reckon on continuation of corrective movement only after break of resistance at 68.80. In this case we can count on growth of the quotes towards 70.00 and 71.10.

Our recommendations: Short-trades from 68.80.

 

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