After being sold for about a month and a half, the oil is being slightly corrected. It’s still too early to say that it has completely recovered, but little by little investors are starting to buy the asset that has lowered in price quite a lot recently.

On one hand, these long positions, apart from quite attractive prices, are based on the USD weakness. As long as the American currency is under pressure, investors have reasons to buy. On the other hand, fundamental background remains “bearish” and the positive momentum in the oil may quickly disappear at the first signs of strong USD.

The US numbers on the Gas Storage and Crude Oil Inventories have been growing for 8 consecutive weeks. The Oil Refinery Plant Utilization is also improving (90.1%, according to the latest data) as well as the Oil Extraction Volume (11.7M barrels per day – all-time high). At the same time, there is information about the oil extraction increase in Russia, although Saudi Arabia is trying to balance the offered market by itself and take steps to decrease the daily extraction volume.

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In the meantime, the global demand for the oil is not growing as fast as it was expected, further still, it is expected to slow down even more in the weeks to come. This factor may also have some negative influence on the oil prices.

It might be really interesting to watch the OPEC+ creating a new document regulating the oil extraction for the countries that joined the agreement earlier. Previous regulations outlived themselves, new ones haven’t been created yet, while the oil market does require some restrictions. There is an opinion that the OPEC+ may start working on a new agreement in the nearest future and present it to the world by the end of the first quarter 2019.

Brent is still trading inside the long-term downtrend. Of course, many investors may already be bored of such monotonous decline, but there are hardly any signals for a significant correction so far. As we can see in the H1 chart, after breaking the support line of the previous channel, Brent hasn’t been able to reach the target support line of the projected channel and right now is forming a short-term correctional trend. The instrument is back into the previous channel and currently testing its support line again. In case the line is broken, the price may fall towards the target at 61.10. However, one should realize that the test may result in a rebound. In this case, Brent may continue the correction towards the resistance line at 70.00.

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