Fundamental analytics

Brent: Oil production in the Gulf of Mexico is being restored


Oil market is being traded short on the back of messages saying, that tropical storm “Barry”, which status was updated to hurricane for a short while, on Monday evening has left the Gulf of Mexico without causing any tangible damage to local oil production infrastructure. It can take several days for full production to be resumed. Correspondingly investors now expect quite rapid resumption of oil production and refining and it’s a bearish signal for the market. Let’s remind, that earlier mass media reported, that oil output in the Gulf of Mexico was down 73% to 1,4 million barrels per day.
We can relate to support factors messages, that Israeli activists has directed petitions to the court of Gibraltar with demand to block the return of an Iranian oil tanker, that was seized by British Royal Marines last week, threatening British diplomatic efforts to defuse tensions in the Gulf. Investors have concerns about escalation of the conflict around Iran and problems with energy supplies from the Middle East region.

Today market will also follow the release of data on export and import in USA and speech of the Federal Reserve Chair Jerome Powell.

On the chart trading goes around the 66.00 level. Despite the local decline bulls continue to hold control over the situation, therefore on current levels we can expect completion of correction and resumption of upward movement with targets at the 67.50 and 68.80 levels.

Resistance levels: 67.50, 68.80, 72.50;

Support levels: 66.00, 63.70, 62.50.

Main scenario: Growth towards 67.50.

Alternative scenario: Gaining a foothold below 66.00 and decline towards 63.70.

On the market a neutral sentiment has established, therefore for intraday trading we give preference to long-positions, that can be considered at current levels