Fundamental analytics

Oil market remains under pressure.



Gas price is gradually recovering having settled above resistance at the 2.610 level. Thus the asset retains very good chances for further recovery in direction of the 2.735 level. Primary reversal point was the 2.520 level, after its false break a mighty reversal signal was formed and now we observe its execution.

From fundamental analysis point of view the strongest influence on trading process is produced by data of the US industry statistics on changes in gas inventories. According to the data released last week gas inventories rose by 85B against the forecast of 87B. This week analysts expect growth of this indicator by 87B.

Our recommendations: Longs from 2.590.


Crude oil on Tuesday got under strong pressure due to the escalation of trade dispute between USA and China, that drove to substantial decline of the main stock indices.

On Monday China has threatened United States with retaliation for tariffs on Chinese export, that were applied earlier. Beijing is intended to hike tariffs shortly on $60 billion worth of US imports. Responding to these threats the White House noted, that it’s ready to raise tariffs by 25% on new list of Chinese goods with total cost of $300 billion as early as this summer. In his interview Donald Trump warned China to withhold from retaliation against American tariffs since this might drive to a higher escalation of trade dissents.

Financial markets reacted to all those claims by strong decline, since execution of all these threats will lead to tangible growth of consumers’ and companies’ expenses slowing down the growth of global economy. This in turn puts under threat maintaining of current energy demand not to mention its growth.

There are also support factors on the market, that substantially limit the scale of oil prices’ decline. It came known on weekend that an attack of Saudi oil vessels near the Strait of Hormuz took place. Now some investors have fears on emerge of disruptions in oil supply through the Strait of Hormuz.

Conflict between USA and Iran continues to escalate. Yesterday the US Secretary of State Mike Pompeo has cancelled his visit to Russia and flew to Brussels to meet European diplomats. The reason to change the schedule were new claims of Iran’s authority with threats to leave the “nuclear deal”. The probability of military conflict between two countries is getting higher as well, that would be a powerful driver for the growth of oil prices.

On the chart the price quite predictably has met resistance close to the 72.00 level. The price made a steep pullback off this mark denoting its priority in favor of further development of bearish movement in direction of the 68.65 level and in case this mark is broken we can expect decline towards 66.00.

Our recommendations: Shorts from 70.30.

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