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Crude Oil Already Considered Negative News

On Monday 4 April, the Brent price is “in the black”; the asset is trading at $105.40.

This sharp decline in oil prices was caused by US President Joe Biden’s decision to “unleash” the country’s reserve oil tanks and sell 1 million barrels every day. In total, 180 million barrels are expected to be sold from May to October. Moreover, the International Energy Agency agreed to unleash its oil reserves but no particular volumes have been announced yet.

This measure is expected to be a temporary solution and won’t help to solve the supply shortage issue.

Geopolitics is slowly becoming normal. The conflict between Saudi Arabia and Houthis from Yemen is dying down as the parties agreed to cease fire. It’s good news for oil deliveries.

In the H4 chart, having completed the correctional structure at 113.66, Brent is consolidating around his level. If later the asset breaks this range to the upside, the market may resume growing to break 112.69 and then continue trading upwards with the first target at 122.20. After that, the instrument may correct to return to 112.70 and then resume trading upwards with the short-term target at 141.20. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 outside the histogram area, which means that it may grow to break the above-mentioned level and then continue moving towards new highs.

As we can see in the H1 chart, after finishing the correction and forming the first ascending impulse at 107.69, Brent is correcting downwards and may soon reach 104.20. Later, the market may start another growth to break 109.55 and then continue trading within the uptrend with the first target at 115.10. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: its signal line is moving above 80 and may soon resume falling towards 50. After that, the line is expected to rebound from 50 to the upside and grow to return to 80.

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