Fundamental analytics

Brent: Market is expecting industry data from the U.S.


Oil quotes are traded short again being under pressure of uncertainty in China-United States trade relationship and situation on the stock market.

The major American and European indices has closed trading session in the red yesterday reflecting low interest of investors in dicey assets.

Traders still have concerns about the situation in global trading and are afraid of escalation of trade dispute between USA and China, that may drive to slowdown of economic activity in the world and decline in oil demand.

One more significant factor, that puts pressure on oil market is industry statistics from the U.S.. Last data indicates the growth of oil inventories in USA on the back of refineries workload decline and low internal fuel demand. Investors have hopes, that data from Baker Hughes on decline in drilling activity in medium term will facilitate decline in production and oil inventories in USA. Since Monday was a day-off in the United States, reports from API and Energy Department will be released a day later this week, i.e. on Wednesday and Thursday correspondingly. Analysts forecast decline in oil inventories by 0,8 million barrels.

The major support factor for oil market is tough situation in Libya, Venezuela and Iran. Growth of tension in any of these countries may lead to disruptions in oil supply to global market. Last week United States have enhanced their military group in the Middle East and ramped up funding of their Arabian allies. Iran has threatened with retaliation and now investors have fears regarding escalation of the conflict and armed clash between the parties.

On the chart a previously mentioned resistance level 68.80 was reached yesterday. The price has reversed to the downside from this level and it is heading to intermediate resistance level at 67.25 now. If buyers fail to keep the price above the 67.25 level, the next target for price movement might be the 66.00 level.

Resistance levels: 68.80, 71.10, 72.50;

Support levels:  67.25, 66.00, 65.50.

Main scenario: Correction to the 68.80 region and decline towards 67.25.

Alternative scenario: Gaining a foothold above 68.80 and growth towards 70.00.

Locally a moderately-negative sentiment prevails on the market. On the chart signals pointing to further development of downward movement also prevail. Therefore within intraday time-frame we should give preference to short-trades for this asset, that should be considered adjacent to the 68.80 level.



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