Fundamental analytics

Brent: Oil market remains under pressure


After a slight correction oil market resumed downward movement and on Monday Brent is being traded down 1,5%, WTI became cheaper 1,4%.

A circumstance, that triggered sell-offs was Donald Trump claim about putting new tariffs on Chinese goods, that may ruin the negotiation process between two countries. Trump last week announced he would impose a 10% tariff on $300 billion of Chinese imports starting on September 1 and said he could raise duties further if Xi Jinping failed to move faster towards a trade deal. According to estimates of numerous analysts this conflict may be frozen at least until presidential elections in USA scheduled for next year. This may drive to further slowdown in global economy, that in turn will curb fuel demand.

Investors continue to follow the situation around Iran. According to reports of mass media Islamic Revolutionary Guards Corps has seized the ship, that transported contraband oil in the Persian Gulf. In case of another escalation of the situation oil might get a substantial local support.

Bearish signals prevail on the chart. After a minor correction towards the 62.30 level oil resumed movement to the downside in direction of the 59.50 level. In medium term outlook we can’t rule out a deeper slide of the quotes towards the annual trough under 59.00.

Resistance levels: 62.30, 64.30, 66.60;

Support levels: 60.60, 59.50, 58.80.

Main scenario: Decline towards 59.50.

Alternative scenario: Stabilizing above 60.60 and growth towards 62.20.

Fundamental background is still negative. Therefore for intraday trading we consider short-trades for this asset from the 62.30 level.


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