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Brent: Oil market is expecting trade talks between USA and China

Brent

On Wednesday oil was traded mixed and closed trading session almost at the opening level. Uncertainty on the market was created by expectations of upcoming trade talks between USA and China. Market is getting very controversial news from early departure of Chinese delegation from Washington to yields of the White House in the shape of granting licenses that would allow American firms to sell nonsensitive supplies to Huawei corporation. Investors show very nervous reaction on any message concerning this topic. The dispute has disrupted global supply chains and slowed growth in the world’s two largest economies, reducing fuel consumption in both countries.

In the coming days we can expect an increase of volatility and uncertainty amid publishing news on the progress in US-Sino trade talks that are due today.

Some pressure on the market was put by data from U.S. Energy Department on growth of crude stocks by 2,9 million barrels against the forecast of 1,4 million barrels. At the same time oil products stocks dropped during this period.

On the chart trading goes in the 57.20-58.90 range this week. So far we don’t have clear signals that price might leave the sideways channel, therefore today we expect further development of movement in the horizontal channel.

Resistance levels: 58.90, 60.00, 61.40;

Support levels: 57.20, 55.55, 55.00.

Main scenario: Consolidation in the 57.20-58.90 range.

Alternative scenario: Break of support at 57.20 and decline towards 55.55.

Mixed sentiment is established on the market. Sideways channel 57.20-58.90 is developing on the chart. Inside this sideways channel we can consider long-positions from the 57.20 level.

 

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