Fundamental analytics

Brent: Negative news prevail on the crude oil market


Oil market has closed the fourth consecutive day with decline. By Wednesday’s close WTI has retreated almost 1% of its cost. Brent sank 0,7%. Pressure on the price was produced by data of industry statistics from the U.S. and news related to international trading.

According to report of the U.S. Department of Energy decline of oil inventories in the latest week made a bit more than 3 million barrels versus forecast of -2,7 million barrels, whereas during the same period of time total growth of petroleum and distillate inventories surpassed the mark of 9 million barrels. This data points to a substantial decline in real energy demand providing bearish signal for the market. Also investors has paid attention to data on energy export, that showed drop of the export to the March 15 lows.

One more bearish signal for the market were messages of information agencies regarding U.S.-China trade talks, that were virtually put on hold due to dissents around tech-giant Huawei. In the latest month the parties didn’t held a single meeting and so far making do with phone calls only. For investors it’s a signal, that negotiation process can be extended for many months, that will produce a negative impact on development of global economy and global oil demand.

On the chart a bearish wave continues to develop, which so far didn’t reach its primary target that resides at the 62.50 level. Therefore today we expect further development of downward movement.

Resistance levels: 64.80, 66.00, 67.30;

Support levels: 62.50, 61.00, 59.50.

Main scenario: Decline towards 62.50 and correction to the upside.

Alternative scenario: Stabilizing below 62.50 and decline towards 61.00.

Negative sentiment prevails on the market, therefore for intraday trading we give preference to short-trades of the asset seeking entry points in the vicinity of 63.70 level.

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