Crude Oil by Solid ECN

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Crude Oil, decline on expectations of the "hawkish" rhetoric of the US Federal Reserve
Previously, experts predicted that the US regulator would raise rates by 50 basis points at a meeting on Wednesday, but after the release of strong data on the consumer price index for May last Friday, more investors expect a change of 75 basis points, which puts pressure on stock positions and oil. Last month, the inflation in the US accelerated from 0.3% to 1.0%, which exceeded the average market forecasts of 0.7%. The value has renewed 40-year highs, reaching a new peak at 8.6% YoY, while in April, the growth was 8.3%.

Additional pressure on the oil quotes is exerted by reports that the chairman of the US Senate Finance Committee, Ron Wyden, plans to pass a law establishing a 21% income tax on excess profits of oil and gas companies with an annual income of more than 1B dollars, which analysts perceive as excessive in these conditions.

From an even stronger fall, the trading instrument is kept by reports that Libya has almost completely stopped oil production due to the political crisis in the east of the country. Market losses are estimated at 1.1M barrels per day, although last month's production averaged 1.2M barrels per day. Libyan Oil Minister Mohammed Aoun said that almost all fields are currently closed. In turn, the limitation of oil production leads to a lack of supply, which, against the backdrop of high demand, does not allow prices for Brent Crude Oil to fall below 120.

The long-term trend is upwards. In early June, the support level of 120 was broken, around which the price is now correcting, and long positions with the target of around 129 may be opened here. The medium-term trend is with the target in zone 3 (127.57–126.67). Now the price is heading for a correction towards the area of the trend's key support at 117.63–116.76, after reaching which, long positions with the first target at the current week's high at 126.20 may be opened.

Resistance levels: 129, 135 | Support levels: 121, 115.2, 107.15

 

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Crude Oil, prices for "black gold" are slightly reduced
During the Asian session, Brent Crude Oil prices are traded in different directions, consolidating near 117.00. Yesterday, the instrument moderately declined in response to the publication of macroeconomic statistics on energy reserves, which slightly eased experts' fears regarding oil supply on the market.

In particular, the International Energy Agency (IEA) report indicated an increase in commercial oil reserves worldwide by 77M barrels in April compared to March. The positive dynamics were confirmed by the Energy Information Administration of the US Department of Energy (EIA) statistics: as of June 10, the indicator rose by 2M barrels, while analysts expected it to decrease by 1.3M barrels. The overall level of oil production in the United States also increased by 100K barrels per day to a combined level of 12M barrels per day. The OPEC report reflects that demand from market participants remained around 3.4M barrels per day, amounting to 100.3M barrels per day. The cartel is confident that the resumption of scheduled air travel after the coronavirus pandemic and the elimination of disruptions in supply chains will maintain positive momentum.

In turn, quotes continue to be supported by the prospect of a decrease in oil supply on the market with a moderate increase in consumption. Thus, the export of resources from the Russian Federation is currently difficult since Western countries are actively introducing new blocking sanctions against the Russian economy in response to a special military operation on the territory of Ukraine. Analysts note that the decline in the production of raw materials in Russia will be compensated by the growth in production in the Middle East and the United States, but only partially.

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range remains practically unchanged, reflecting the flat nature of trading in the short term. The MACD indicator is falling, keeping a strong sell signal (the histogram is below the signal line). Stochastic shows similar dynamics, approaching its lows and indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 120, 123.24, 125.85, 128.6 | Support levels: 116, 114.09, 112, 109

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Crude Oil - prices retreated to new local lows
The trading instrument is under pressure from the rhetoric of US Federal Reserve Chairman Jerome Powell, who, during a speech in the Senate Committee on Banking, Housing and Urban Affairs, announced the continuation of the "hawkish" course of the regulator regarding the adjustment of interest rates to combat record inflation. At the same time, experts are worried that too sharp tightening could provoke a recession in the national economy. In June, the department decided to raise the rate by 75 basis points, and now analysts are trying to predict how the rate will change during the July meeting. A similar situation is developing in other countries: thus, this month, the Bank of England raised the rate for the fifth time.

Cecilia Rose, chairman of the council of advisers to the head of the White House on economics, noted that the decline in prices for "black gold" could be triggered by increased supplies of Russian energy resources to China and India against the backdrop of the discount policy he presented. In particular, China increased imports by 55% YoY, about 2M barrels per day.

The dynamics of the asset slowed down after the publication of data on stocks of raw materials in the US. Thus, the report released on Wednesday from the American Petroleum Institute (API) reflected a sharp increase in the index for the week of June 17 by 5.607M barrels after an increase of 0.736M barrels over the previous period. The final statistics from the Energy Information Administration of the US Department of Energy (EIA) have not yet been released due to technical problems.

On the daily chart, Bollinger Bands are steadily declining: the price range is expanding, letting the "bears" renew local lows. MACD falls, keeping a fairly strong sell signal (the histogram is below the signal line). Stochastic reverses into a horizontal plane near 20, signaling that the instrument may become oversold in the ultra-short term.

Resistance levels: 105, 107.67, 110, 113.13 | Support levels: 103, 101.09, 100, 98

 

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Crude Oil Market Update
Brent oil price shows some bearish bias to hint heading to decline in the upcoming sessions, motivated by stochastic negativity, making the bearish bias suggested for today conditioned by the price stability below 110.10, supported by the negative pressure formed by the EMA50, noting that our main waited target is located at 105.05.

The expected trading range for today is between 106.50 support and 112.20 resistance.

 

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Brent Crude Oil - G7 prepares to set cap prices for Russian oil
Yesterday, the quotes showed a moderate increase, caused by the experts' fears of a reduction in the supply of raw materials to the market. In particular, it is expected that new restrictions may be introduced following the results of the summit of the leaders of the G7 countries in the Bavarian Alps, where the issue of the marginal cost of Russian "black gold" is currently being discussed. The initiative, which involves determining the maximum price of the energy resource directly from the buyer, was introduced by US officials, who note that this will significantly reduce the revenues of the Russian budget against the backdrop of reduced supplies. While the final decision has not been made, it is reported that the negotiations are being conducted "constructively." In turn, the French authorities called on Iran and Venezuela to increase their oil production to start correcting prices on the market. Among other measures, new bans on gold imports are expected, as well as a possible expansion of the oil embargo. Macroeconomic indicators in countries dependent on energy supplies are showing the first signs of a slowdown, which is only partly due to the price itself, as the fall in supply has so far been offset by a decrease in demand.

Traders fear a recession in several of the world's leading economies, including the United States, where inflation remains at record highs despite the active actions of the American regulator, and too rapid interest rate growth negatively affects the well-being of households accustomed to extremely low costs borrowings.

The focus of investors on Tuesday, also with speeches by representatives of the European Central Bank (ECB), is a report from the American Petroleum Institute (API) on oil inventories for the week of June 24. Previous statistics showed an unexpectedly high increase of 5.607M barrels.

On the daily chart, Bollinger Bands are moderately declining: the price range is actively narrowing, reflecting the ambiguous nature of trading that has developed in the short term. The MACD indicator is growing, forming a new buy signal (the histogram is above the signal line). Stochastic is showing more confident growth, but it is rapidly approaching its highs, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 112, 114.09, 116, 120 | Support levels: 109, 106, 102.57, 100

 

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Crude Oil - growth amid a possible shortage in the oil market
The trading instrument is supported by the latest decisions of the leaders of the G7 and macroeconomic statistics. Yesterday, during the summit, it was decided to study ways of forcibly limiting prices for Russian oil, but it increased investors' fears of an additional shortage in the energy market. Earlier, Russian officials have already stated that the country will not trade hydrocarbons at a loss, so any attempts to artificially limit prices may lead to Russia's refusal to supply oil to the G7 countries and the final reorientation of exports to Asian markets, which is happening now. Meanwhile, there is nothing to replace Russian energy carriers since the calculation of additional purchases from Saudi Arabia, and the United Arab Emirates is not justified. Previously, it was believed that the two countries have a reserve of mining capacity to cover the shortage of proposals. Still, this week, UAE Energy Minister Suhail al-Mazroue said that the country's production of raw materials is close to the maximum, and it is unlikely that it will be possible to increase it significantly. Saudi Arabia, according to experts, will be able to increase production by no more than 150K barrels per day, which will not cover the demand.

The price is moving within the ascending channel. The key "bullish" level is the middle line of Bollinger bands around 115.40, the breakout of which will give the prospect of further growth to 118.75 (Murrey [3/8]), 125.00 (Murrey [4/8], the upper line of the ascending channel). If the asset consolidates below 111.50 (Fibonacci retracement 23.6%), the decline may resume to 106.25 (Murrey [1/8]), 102.50 (Fibonacci retracement 38.2%).

The indicators do not give a single signal: Bollinger bands reverse downwards, the MACD histogram is stable in the negative zone, but Stochastic points upwards.

Resistance levels: 115.40, 118.75, 125 | Support levels: 111.50, 106.25, 102.5​

 

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Crude Oil - The price may fall.

If the assumption is correct, Brent Crude Oil will fall to the levels of 77.08–62.5. In this scenario, critical stop loss level is 126.4.

 

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Brent Crude Oil: global recession risks increase pressure on the instrument

Brent Crude Oil prices are falling to 101.50 amid investors' fears about the global economy going into recession due to the ongoing military conflict in Ukraine and persistently high inflation in developed countries. Another negative factor for hydrocarbon prices is the discussion by the United States and G7 allies of setting a ceiling price for Russian oil at 40–60 dollars per barrel to reduce energy sales revenues to the Russian Federation's national budget as part of the sanctions policy.

Thus, we can assume that the fall of the trading instrument will continue in the medium term, and the target for sales will be the March low of 98.00.

The long-term trend in the oil market remains upward. The key support for the trend is at 98; after holding it, the growth will continue with the target at the June high. Otherwise, the asset may decline to 91.1 and 86.3.

The medium-term trend is downwards. This week, the target zone 2 (108.93–108.06) was broken, which suggests a further decline in prices towards zone 3 (100.23–99.36). The key resistance of the trend is shifting to 110.16–109.31, from where it is worth considering new short positions.

Resistance levels: 107.75, 119.10, 125.65 | Support levels: 101.50, 98., 91.1

 

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Crude Oil - the oil market is correcting after the collapse​

After a significant decline last week, the trading instrument moved to an upward correction caused by statements by the state oil company of Saudi Arabia, Saudi Arabian Oil Company, that a supply crisis does not threaten the oil market, as it has an additional production capacity of 1.5M barrels per day, which can be used if necessary. Although this level cannot be maintained for long, it will be enough to compensate for the lack of oil while other members of OPEC+ increase their production. Confidence that Saudi Arabia has these opportunities is added by the announced goals of the Saudi Arabian Oil Company to increase production from 12M barrels to 13M per day by 2027. Also, the US authorities are actively trying to negotiate with Asian countries on setting marginal prices for Russian oil around 40–60 dollars per barrel. Moscow has already stated that it will not trade energy resources in such conditions. If this happens, then, according to experts, oil prices will be able to exceed 300 dollars per barrel.

On the global chart, the trading instrument is moving below the global support line, limiting the possibility of long-term growth. Technical indicators maintain an increasing sell signal: fast EMAs of the Alligator indicator are moving away from the signal line, and the AO oscillator histogram is forming downward bars in the sell zone.

Resistance levels: 108.22, 113.66 | Support levels: 98.57, 92.4​

 

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Crude Oil - the oil market continues to correct

Brent Crude Oil quotes are correcting, trading just above 98, amid serious concerns about falling energy demand due to a new outbreak of coronavirus in China and, as a result, severe restrictions on the movement of citizens.

The market is awaiting the outcome of US President Joe Biden's visit to Saudi Arabia. John Kirby, National Security Council strategic communications Coordinator at the White House, said yesterday that Biden intends to hold meetings with King Salman bin Abdulaziz Al Saud, as well as with Crown Prince Mohammed bin Salman Al Saud. This visit has a specific goal of persuading Saudi Arabia to increase oil production levels, thereby reducing its quotes on the world market. However, experts are sure that it will not be successful for the United States, since the day before it became known that at a recent online summit of the BRICS organization, which includes the Russian Federation and China, the issue of Saudi Arabia's membership in the organization was discussed.

On the global chart, the price is trading below the key level of 100.00. Technical indicators are holding a steady sell signal, which is still strengthening: fast EMAs of the Alligator indicator are moving away from the signal line, and the AO oscillator histogram, being in the sell zone, is forming new descending bars.

Support levels: 96.22, 88.63 | Resistance levels: 100.7, 106​