Fundamental analytics

Brent: Oils is being traded in a sideways channel

Brent

Brent crude grade is still being traded in a very tight range on the back of absence of significant economic and geopolitical news on the market, which could substantially change the balance power on the arena.

Moderate support to the quotes now is being provided by published late on Friday data from Baker Hughes on drilling activity. U.S. energy companies last week reduced the number of oil rigs operating for the fourth consecutive week. According to the report oil rig count in the U.S. has dropped to its lowest for the last 17 months. This data may signify a probable continuation of trend on curtailment of production level and inventories in the U.S.

Market is also focused on the conflict around Iran. There are still high tensions between USA and Iran, but lately both parties restrain from escalation of the conflict, that locally puts pressure on oil. Weekend negotiations between Iran and major powers ended on a generally positive note, suggesting an easing of tensions in the Middle East. 

On the chart the price continues to consolidate in the range between the 62.30 and 64.00 levels. Today there are no important news on the market, therefore we can expect further development of trading inside the mentioned price channel, which is very likely.

Resistance levels: 64.60, 66.60, 67.30;

Support levels: 62.60, 61.00, 59.50.

Main scenario: Growth towards 64.00.

Alternative scenario: Break of support at 62.30 and decline towards 61.00.

Neutral sentiment is established on the market, therefore today we expect development of a sideways channel in the 62.30-64.00 range. We should seek for entry points from the boundaries of the marked price channel.

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