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Oil market updates by Solidecn.com

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A serious rally in the oil market, associated with global economic instability and the development of the Ukrainian crisis, has been going on for more than two months and is unlikely to stop in the near future. Last week, the quotes of WTI Crude Oil resumed growth and rose to the level of 106.25 (Murray [7/8]), which is now being actively tested.

The market is in a state of considerable uncertainty, as it is influenced by several opposite factors. The pressure on energy quotes is exerted by the complex epidemiological situation in China, where an increase in the incidence of coronavirus is recorded. At the moment, Beijing remains under threat of complete lockdown, while the financial and industrial center of Shanghai has been in strict isolation for more than a month. The continued tightening of quarantine restrictions continues to jeopardize the demand for oil from the Chinese economy, which is its first global consumer.

On the other hand, the embargo announced today on the supply of Russian oil and petroleum products to the EU countries contributes to the growth of quotations. The head of the European Commission, Ursula von der Leyen, announced her readiness to refuse the purchase of raw materials by the end of this year. However, an exception will be made for a number of countries most dependent on Russian oil, for example Hungary and Slovakia. The embargo on Russian resources, which account for 26% of imports to the EU, creates the problem of replacing the missing volumes. It will not be easy to solve it, since global production is already unable to meet demand. Meanwhile, the OPEC+ cartel is in no hurry to increase oil production, as its members are satisfied with the current windfall. It is expected that during the meeting scheduled for Thursday, a decision will be made to maintain a moderate pace of production growth.

Another factor supporting prices is the reduction of reserves of "black gold". According to the latest data from the American Petroleum Institute (API), a decrease of 3.479M barrels was recorded. A similar report from the Energy Information Administration of the US Department of Energy (EIA) will be released today, which may also reflect a downward correction of 0.829M barrels. Under these conditions, oil quotes may continue the upward trend.

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Consolidation of the price above the mark of 106.25 (Murray [5/8]) will give the prospect of growth of the trading instrument to the levels of 112.50 (Murray [6/8], Fibo retracement of 23.6%) and 118.75 (Murray [7/8]). If the price consolidates below the middle line of the Bollinger Bands and the 100.00 mark (Murray [4/8]), the decline will resume in the area of 93.75 (Murray [3/8]) and 87.50 (Murray [2/8], Fibo retracement of 61.8%).

The indicators do not give a single signal: the Bollinger Bands are horizontal, the MACD histogram is at the zero line, its volumes are insignificant, and the Stochastic is directed downwards.

Resistance levels: 106.25, 112.50, 118.75 | Support levels: 100, 93.75, 87.5

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Prices for benchmark Brent Crude Oil are correcting, trading above the 110 dollars per barrel mark amid the disclosure of information about shady transactions for the purchase of Russian "black gold" by China.

There has been an upward turn in the market after the Financial Times published an article that disclosed information about the purchase of Russian oil by Chinese refineries from state-owned traders incognito in order to avoid US sanctions. The newspaper refers to an employee of a private oil refinery in Shandong, who said that deliveries have been carried out since the beginning of March, and these transactions have not been publicly disclosed. First of all, this news alerted officials in the USA and the EU, who are developing restrictions on energy imports from the Russian Federation. So, the EU authorities presented the sixth package of sanctions against the Russian economy, which includes steps to phase out the supply of "black gold". According to the President of the European Commission, Ursula von der Leyen, the achievement of a full embargo on oil will be possible only in six months, and on petroleum products – at the end of this year. An exception will be made only for Slovakia and Hungary, which will still be able to buy resources from Russia under existing contracts, since their dependence on supplies is very high. The sixth package of sanctions will be approved on May 10 at the next meeting of the EU Council on Foreign Affairs.

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On the weekly chart, the price attempts to overcome the resistance line of the global triangle pattern. Technical indicators reversed and issued a new buy signal: the fast EMAs of the alligator indicator crossed the signal line from the bottom up, and the histogram of the AO oscillator moved into the buy zone.

Support levels: 100.8, 90.1 | Resistance levels: 113.26, 129

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On the daily chart, an ascending wave C is developing, in which the first wave 1 of (1) of C was formed. At the moment, the downward correction continues to develop as the second wave 2 of (1) of C, in which the lower level wave a of 2 has formed and the wave b of 2 is developing. 

If the assumption is correct, the price will fall to the levels of 77.08 - 62.5. The level of 139.45 is critical and stop-loss for this scenario.

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On the daily chart, crude oil tests the resistance at $109 for the third continues trading day. The level's break-out is imminent. In this case, the next target will be March 24th peak at $115.8. 

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On the 6H time frame, the pair is trading in the uptrend tunnel struggling for a break-out. If the bears can push the black gold below the 25 daily moving average, we will witnessing a double top pattern. In this scenario, the correction started from March higher highs will continue, and a retest of the support levels at $99.5 and $99 can be seen in the upcoming weeks.

Resistance Levels: $109.26 , $111.69 , 126.63 | Support Levels: $105.2 , $99 , $92.2

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Trade suggestions:
Buy stop
: $110.3 , Target: $115.5 , Stop: $105.4
Sell stop: $106.1 , Target: $99.3 , Stop: $110.8

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Brent Crude Oil prices are consolidating near 104.00, correcting after an active decline yesterday. At the beginning of the current trading week, quotes lost sharply in value in response to reports that several EU countries are still blocking the introduction of a full-fledged oil embargo on supplies from Russia.

Last Sunday, the leaders of the G7 countries held talks via videoconference, within which the decision to phase out energy resources and ban the import of "black gold" from Russia was supported. Against this background, the participating countries pledged to cooperate on the issue of ensuring the stability of supplies, finding suppliers, and reducing fuel dependence. Meanwhile, negotiations in the EU concerning new sanctions under the sixth package of economic restrictions on the supply of Russian oil and petroleum products ended unsuccessfully. The representatives of Hungary voted against them, as the country's dependence on supplies from the Russian Federation is about 60%, and this blocking does not yet allow the introduction of a pan-European embargo. The next round of negotiations can be started today, but the head of the European Commission, Ursula von der Leyen, said that progress in discussing the issue with the country's leader Viktor Orban is noticeable.

Meanwhile, Saudi Arabia adjusted Arab Light crude prices to 4.40 dollars per barrel for June Asian deliveries for the first time in four months. The indicator dropped significantly compared to the May value of 9.35 dollars. The decline is due to the current uncertainty in the oil market and, in particular, a possible ban on the supply of Russian "black gold" due to the escalation of the military conflict in Ukraine and the strengthening of quarantine restrictions in China. The country's authorities, adhering to the policy of "zero tolerance" regarding the spread of COVID-19, introduced quarantine in Shanghai and Beijing, which led to a noticeable decrease in demand in the oil market.

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On Tuesday, traders will focus on the publication of the American Petroleum Institute (API) on stocks in the US for the week of May 6. The previous report reflected a sharp decline of 3.479M barrels.

On the daily chart, Bollinger bands show predominantly flat dynamics: the price range practically does not change, remaining quite spacious for the current level of activity in the market. MACD falls below the signal line, keeping a strong sell signal, and prepares to consolidate below the zero line. Stochastic shows a more active decline, rapidly approaching its lows and indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 106, 109, 112, 115.5 | Support levels: 102.57, 100, 96.5, 93.34

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WTI oil prices show corrective growth during the Asian session, recovering from a rather active decline at the beginning of the current trading week. Quotes are testing the level of 101.00; however, the factors capable of having a significant impact on the dynamics of the trading instrument have not yet appeared on the market. Earlier, oil prices came under pressure due to the fact that the EU countries did not agree on restrictions on the import of oil products from Russia in their sixth round of sanctions. In addition, low demand for oil from China did not allow the "bulls" to develop an upward momentum in the asset.

The day before it became known that a ban on the transportation of oil was excluded from the next package of anti-Russian sanctions, since the decision provides for coordination at the international level, including representatives of the G7 countries. According to the Deutsche Presse-Agentur, countries such as Greece, Cyprus and Malta are currently opposed to restrictions, arguing that the activities of local shipping companies could be under pressure. In addition, another round of talks between French President Emmanuel Macron and Hungarian Prime Minister Viktor Orban took place the day before, and it is reported that the parties managed to reach an agreement on an embargo on Russian oil and oil products.

Additional pressure on oil quotes was exerted by the report published the day before by the American Petroleum Institute (API) for the week ended May 6, according to which US inventories increased by 1.618 million barrels after a sharp decline by 3.479 million barrels over the past period. During the day, the dynamics of oil reserves from the US Department of Energy is expected to be released. Current forecasts suggest a decline of 1.200 million barrels after rising by 1.302 million barrels last week.

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Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is almost constant, remaining rather spacious for the current level of activity in the market. MACD is going down preserving a strong sell signal (located below the signal line). The indicator is trying to consolidate below the zero level. Stochastic retains a steady downtrend but is located in close proximity to its lows, which indicates the risks of oversold instrument in the ultra-short term.

Resistance levels: 101.37, 103, 105, 107.67 | Support levels: 100, 98, 96, 93.97

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The quotes of WTI Crude Oil have been trading for the second month within a wide lateral range of 111 - 95 and cannot yet determine the direction of further movement.

Market uncertainty is supported by two main factors. The possible introduction of an embargo on Russian oil supplies to EU countries contributes to the growth, a decision on this is being worked out, but has not yet been agreed due to the extreme dependence of a number of European countries on supplies from Russia. On the other hand, the strengthening of the exchange rate is hindered by the outbreak of the coronavirus pandemic in China, the world's largest exporter of "black gold". The deterioration of the epidemiological situation in the country can seriously undermine demand. 

Recent statements by the International Energy Agency (IEA) and OPEC are also holding back growth. The head of the IEA, Fatih Birol, announced the possibility of bringing additional volumes from reserves to the market if necessary. The cartel's management has again lowered its forecast for the growth of global oil demand this year, citing the impact of the Ukrainian crisis, rising inflation and the development of a pandemic in China. This year, demand may reach 3.36M barrels per day, which is 20K barrels lower than the previous forecast. This situation practically guarantees that OPEC and its allies will maintain the previous insignificant rates of production growth. Nevertheless, despite a number of negative factors for the oil market, fears of the EU's refusal to supply Russian "black gold" still dominate.

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The price has risen above the mark of 106.25 (Murray [1/8]), supported by the middle line of the Bollinger Bands, and may continue to rise to the levels of 112.50 (Murray [2/8], Fibo retracement of 23.6%) and 118.75 (Murray [3/8]). The key level for the "bears" is at 100 (Murray [0/8]). If consolidated below it, a decline to 93.75 (Murray [-1/8]) and 87.50 (Murray [-2/8], Fibo retracement of 61.8%) may begin.

Technical indicators do not give a single signal: the Bollinger Bands are horizontal, the MACD histogram is at the zero line, its volumes are insignificant, and the Stochastic is directed upwards.

Resistance levels: 112.50, 118.75, 125 | Support levels: 100, 93.75, 87.5

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During the Asian session, Brent Crude Oil prices are moderately declining, retreating from local highs of May 9 at 111.5 and testing 108.5.

The positive dynamics at the end of last week were due to the announcement of new restrictions on the import of Russian oil by the EU. It tries to agree on the sixth package of sanctions against the Russian economy, including a ban on oil supplies, which so far does not find unanimous support among all states since, according to Bloomberg, the heads of some of them have proposed to postpone the embargo. Although specific information was not disclosed, market participants consider a possible refusal as a sign of EU weakness. However, the European Commission was earlier ready to provide financial compensation to countries most dependent on Russian supplies, such as Hungary and Slovakia. Prime Minister of Hungary Viktor Orban said that any changes regarding oil transportation should be discussed at EU leaders, while he announced his readiness to support a pan-European solution if pipelines that supply Russian oil are excluded from the sanctions package. Certain steps are being taken toward reducing Europe's energy dependence on Russia, and agreeing on the terms of a full or partial oil embargo is only a matter of time. Also, unilateral sanctions by the Russian government should not be ruled out.

A report from the International Energy Agency published last week had a certain impact on the market dynamics. It says that rising oil production in the Middle East and the United States will positively impact supply dynamics in the market. Also, given the declining demand for hydrocarbons, it is likely that soon it will be possible to avoid a situation of acute shortage in the market.

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On the daily chart, Bollinger bands are growing slightly: the price range is practically unchanged, remaining quite spacious for the current level of activity in the market. The MACD indicator grows, keeping a relatively strong buy signal (the histogram is above the signal line). Stochastic shows similar dynamics. However, it is quickly approaching its highs, which indicates that the instrument may become overbought in the ultra-short term.

Resistance levels: 109, 112, 115.50, 118.32 | Support levels: 106, 102.57, 100, 96.5

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Benchmark Brent Crude Oil price is correcting, trading just above 112 dollars per barrel.

The quotes have returned to upward dynamics against the backdrop of positive reports received this week about the stabilization of supply in the hydrocarbon market. For example, Saudi Arabia announced that it plans to increase oil production to 13.4M barrels per day by 2027. The country's energy minister, Abdulaziz bin Salman Al Saud, said the country is ready for such an increase in production and will maintain it at this level if the market demands such a volume, but so far, this is not happening.

Iran's state oil company NIOC said it could double the current level of supplies to the global market if buyers are willing. The corporation can achieve similar volumes after the start of the second stage of development of the Azedegan field, whose reserves are estimated at 32B barrels.

Local support for the quotes of "black gold" was provided by a Reuters report, according to which India has seriously increased the volume of oil purchases from Russia. According to the agency, India has placed orders for at least 40M barrels of oil on the exchange between mid-February and now, which significantly exceeds the entire volume of purchases in 2021, which amounted to 16M barrels.

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On the global chart, the price tried to exit the Triangle pattern. The technical indicators reversed and gave a buy signal: fast EMAs of the Alligator indicator crossed the signal line upwards, and the AO oscillator histogram again moved into the buy zone.

Resistance levels: 118.20, 131.8 | Support levels: 108.30, 98.8

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Crude Oil, growth is possible, but correction risks remain

The quotes of WTI Crude Oil have formed a short-term upward channel and this week have reached its upper limit around 115.5.

Currently, prices are supported by positive pandemic data from China and a reduction in oil inventories in the United States. Today it became known that the Chinese authorities allowed 864 institutions to resume work in Shanghai after no new coronavirus cases were recorded outside the quarantine zones of the metropolis for three days. The retreat of the pandemic and the reopening of China's leading financial center give investors hope for stronger demand for oil in the Chinese economy. At the same time, US oil inventories declined again. According to the latest report from the American Petroleum Institute (API), the volume of oil reserves in the United States decreased by 2.445M barrels. So far, the situation seems to be favorable for the market. However, significant risks of price correction remain. They are associated with the postponement of the announced but still not implemented EU embargo on the supply of Russian "black gold." Experts fear that Hungary, which opposes the restrictions, will not be persuaded, or this process may be extremely protracted. Another negative factor for prices could be a US government permit for Chevron Corp. to negotiate oil supplies from Venezuela. If successful, the volume of energy supplies to the market may increase.

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Further price growth is slowed down by the upper limit of the rising channel, around 115.50. If it consolidates above it, the positive dynamics will continue to 118.75 (Murrey [3/8]) and 125.00 (Murrey [4/8]). If 111.50 (Fibonacci retracement 23.6%) is broken down, a correction to 106.25 (Murrey [1/8], the middle line of Bollinger Bands), 102.50 (Fibonacci retracement 38.2%, the lower limit of the ascending channel) may develop. The indicators do not give a single signal: Bollinger bands reverse upwards, the MACD histogram increases in the positive zone but Stochastic is getting ready to leave the overbought zone and may form a sell signal.

Resistance levels: 115.5, 118.75, 125 | Support levels: 111.5, 106.25, 102.5

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Yesterday, Brent Crude Oil prices declined moderately, continuing the development of the corrective impulse formed on Tuesday, when the instrument was at its local highs since March 28 and near the psychological resistance of 114 dollars per barrel.

The pressure on quotes is exerted by reports that the sixth package of EU sanctions against the Russian economy has been blocked. The new restrictions provided for a full or partial reduction in the import of Russian oil and oil products. The issue, as expected, was met with strong resistance from several members of the union, as a result of which the parties could not agree on the exact terms. Negotiations within the bloc will continue. The United States proposed not introducing a complete embargo (at least at the first stage) but implementing import duties only.

Yesterday the quotes were moderately supported by data from the US Department of Energy on the dynamics of oil reserves. Thus, for the week of May 13, oil inventories decreased by 3.394M barrels after a steady increase of 8.487M barrels over the previous period, although market forecasts assumed that positive dynamics would remain at 1.383M barrels.

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On the daily chart, Bollinger Bands show ambiguous dynamics. The price range remains virtually unchanged, remaining spacious enough for the current level of activity in the market. The MACD indicator falls, keeping a poor sell signal (the histogram is below the signal line). Having retreated from its highs, Stochastic maintains a confident downward direction and has not yet reacted to an attempt to resume growth.

It is better to keep the current short positions until the signals from technical indicators are clarified.

Resistance levels: 109, 112, 115.5, 118.32 | Support levels: 106, 102.57, 100, 96.5

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On the daily chart, the upward wave C develops, within which the first wave 1 of (1) of C formed. Now, a downward correction is forming as the second wave 2 of (1) of C, within which the wave of the lower level a of 2 has formed, and the wave b of 2 has ended as a triangle. 

If the assumption is correct, the price will fall to the levels of 77.08 - 62.5. In this scenario, critical stop loss level is 115.62.

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On the daily chart, the first wave of the higher level 1 of (1) of C developed, and a downward correction forms as the second wave 2 of (1) of C. Now, the wave of the lower level a of 2 is developing, within which the correctional wave (ii) of a has ended. 

If the assumption is correct, the price will fall within the wave (iii) of a to the levels of 82.3 - 67. In this scenario, critical stop loss level is 131.17.

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During the Asian session, Brent Crude Oil prices slightly decline, consolidating near 110 dollars per barrel. Yesterday, the quotes failed to record steady growth, despite the general correction of the US currency.

Investors fear that the protracted military conflict in Ukraine and the widespread decline in business activity will lead to a noticeable reduction in demand for "black gold." Nevertheless, there are also favorable factors on the market, for example, the upcoming summer season in the US, when traditionally, the demand among the population for gasoline and other petroleum products is increasing. Skeptics, however, point to a record jump in fuel prices, suggesting a decline compared to the period before the start of the COVID-19 pandemic.

On Tuesday, investors are focused on a block of macroeconomic PMI statistics from Europe and the US. Analysts' forecasts are very negative and suggest a general decline in indices. Also, during the day, a report from the American Petroleum Institute (API) on stocks in the US for the week of May 20 will be released. The previous report showed a decline of 2.445M barrels.

The head of the International Energy Agency (IEA), Fatih Birol, speaking at the World Economic Forum in Davos, which started on Sunday, said that global geopolitical tensions amid the escalation of the military conflict in Ukraine and the ensuing energy security crisis should not lead to even greater dependence states from fossil fuels. Currently, energy prices are too high, which is a negative factor for economic recovery around the world, especially in developing importing countries. The official also said that increased demand for "black gold" in China could pressure the global economy.

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On the daily chart, Bollinger bands move flat: the price range remains practically unchanged, remaining quite spacious for the current level of activity in the market. The MACD indicator tries to reverse into a downward plane, keeping its previous buy signal (the histogram is above the signal line). Stochastic remains relatively strong growth. However, it is close to its highs, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 112, 114.09, 115.5, 118.32 | Support levels: 109, 106, 102.57, 100

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The price of WTI Crude Oil is correcting in an uptrend at 110.1, continuing its volatile dynamics and being under pressure from an unstable fundamental background.

The day before, it became known that the United Arab Emirates resumed the supply of "black gold" to the countries of the European Union after an almost two-year break against the backdrop of a reduction in energy imports from Russia. The first vessel with 1 million barrels of oil on board has already departed for the Dutch port of Rotterdam and, according to Bloomberg TotalEnergies SE has chartered another tanker that is supposed to deliver Arab oil to Egypt, from where it will also enter the EU through an oil pipeline.

According to data from the US Commodity Futures Trading Commission (CFTC), the number of net speculative positions on the asset over the past week increased to 325.6 thousand from 310.8 thousand positions a week earlier, which is fully reflected in the quotes on the stock exchange. In addition, the stabilization of "black gold" reserves in the United States should be noted, which, according to the American Petroleum Institute (API), increased by 0.567 million barrels over the past week after falling by 2.445 million a week earlier.

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After overcoming the upper limit of the global Triangle pattern, the price continues to trade without a pronounced trend. Technical indicators continue holding a buy signal: the range of EMA fluctuations on the Alligator indicator started expanding in the direction of growth, and the histogram of the AO oscillator is still trading in the purchase zone while forming correctional bars.

Support levels: 106.80, 94.74 | Resistance levels: 113.67, 124.96

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During the morning session, Brent Crude Oil prices remain around 111 dollars per barrel. Quotes are moderately supported by expectations of a growing shortage of raw materials yesterday, the summer automobile season in the United States with the simultaneous opening of enterprises in China after the end of the quarantine caused by a new outbreak of COVID-19. Due to the deterioration of the geopolitical situation around Ukraine, the supply of energy resources on the market is noticeably declining, while OPEC+ is in no hurry to increase the current quotas for increasing hydrocarbon production. The cartel members are satisfied with the situation of a moderate, controlled deficit, which allows them to maintain a fairly high level of prices for oil and petroleum products.

The instrument was also supported by the published report from the Energy Information Administration of the US Department of Energy (EIA) on the dynamics of energy stocks in warehouses. Thus, for the week of May 20, the indicator fell by 1.019M barrels after a reduction of 3.394M barrels over the previous period. Analysts had expected a more modest decrease of 0.737M barrels.

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On the daily chart, Bollinger bands are moving flat: the price range has not changed much since the beginning of the week, remaining quite spacious for the current level of activity in the market. The MACD indicator grows, keeping a poor buy signal (the histogram is above the signal line). Stochastic keeps a moderate upward direction but is near its highs, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 112, 114.09, 115.50, 116.5 | Support levels: 109, 106, 102.57, 100

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The reference Brent Crude Oil prices increase, trading just above 116 dollars per barrel amid anxious information regarding the capture of two Greek oil tankers.

As it became known yesterday, the Corps of the Guardians of the Islamic Revolution captured two oil Greek tankers in the Persian Gulf. The action was an answer to the recent decision of the Athenian Court to transfer to the United States Iranian oil from the detained Russian tanker. Similar incidents in the Persian Gulf threaten the entire traffic of oil supply through the Ormuzian Strait, and some suppliers have already begun to think over alternative routes, which will significantly increase the costs of transportation and energy supply time.

Also, to the fundamental background, statistics signal in favor of the growth of the instrument. According to the US Commodity Futures Trade Commission (CFTC), the demand for oil contracts by traders began to increase sharply, and last week their number rose to 334.8K, exceeding 325.6K a week earlier, indicating the intention of the majority of the traders to purchase them in their long-term portfolios.

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On the global chart, the asset is growing within the development of the global Triangle pattern with the ultimate target around the year’s high of 130. Technical indicators keep a stable buy signal: the fast EMA of the Alligator indicator are above the signal line, expanding the oscillation range, and the AO indicator histogram forms upward bars in the buy zone.

Resistance levels: 118.50, 130 | Support levels: 112.3, 100.8

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Brent Crude Oil prices show moderate growth, developing a strong "bullish" momentum formed last week and updating local highs from March 24. At the moment, the instrument is testing the level of 118.9.

Representatives of the EU countries, after lengthy negotiations, agreed on the sixth package of sanctions, which, among other things, includes a partial embargo on the supply of Russian oil, and also prohibits operations related to insurance of the delivery of energy from the Russian Federation to third countries. Earlier Hungarian officials opposed a complete ban on energy imports, comparing it with dropping a nuclear bomb on their economy, and Prime Minister Viktor Orban said that he would support anti-Russian sanctions only after providing guarantees on alternative fuel supplies. In the end, EU leaders still managed to reach an agreement on a partial ban that would not affect Hungary. The restrictions will affect the purchase of "black gold" supplied by sea, but will allow a number of countries to use the existing infrastructure, in particular, the Druzhba oil pipeline, through which deliveries to Germany and Hungary are possible.

The rise in prices for oil and oil products is also facilitated by the beginning of the automobile season in the US, where record prices for gasoline are fixed. The decision of the Chinese authorities also has a positive effect on the quotes: from June 1, the work of enterprises in Shanghai is resumed, and a number of restrictions on the operation of public transport and retail outlets are lifted in Beijing.

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Bollinger Bands in D1 chart show moderate growth. The price range is expanding, but it fails to catch the development of "bullish" trend at the moment. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic has approached its highs, indicating the risks of overbought instrument in the ultra-short term.

Resistance levels: 120, 122.60, 125.85 | Support levels: 118, 115.5, 114.09, 112

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The North American WTI Crude Oil price is correcting in an uptrend around 114.78.

The Wall Street Journal published an article stating the intention of some members of the Organization of the Petroleum Exporting Countries to work out a plan to exclude Russia from the OPEC+ deal. According to experts, Western sanctions and a ban on the import of energy resources by the EU countries will lead to the fact that the production of Russian "black gold" will be reduced by 8% in 2022, and the country will not be able to support the cartel's plan to increase production. However, investors and many analysts have already questioned the reliability of this information since a few days earlier, Saudi Energy Minister Salman bin Abdul-Aziz announced the creation of a draft new OPEC+ agreement, which would include Russia. According to the official, the organization intends to increase production if the oil demand is sufficient. He also stressed that there was no place for politics in an agreement on which the energy stability of the whole world depends.

As for the current demand for oil contracts from investors, according to data from the US Commodity Futures Trading Commission (CFTC), the number of net speculative positions in the asset over the past week increased to 334.8K from 325.6K, which confirms the stable interest of traders for the seventh week in a row.

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The price continues to work out a stable buy signal after overcoming the upper border of the Triangle pattern. At the moment, indicator Alligator's EMA oscillation range is actively expanding upwards, and the histogram of the AO oscillator is trading high in the buying zone, forming rising bars.

Resistance levels: 115.85, 123.8 | Support levels: 111.77, 98.24
 

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Last Tuesday, May 31, the leaders of the countries of the European Union agreed on the sixth package of economic sanctions, which included an embargo on the import of two-thirds of Russian "black gold". Against this backdrop, Brent Crude Oil quotes reached new highs around 122.

The new restrictive measures include a ban on the import of energy resources transported by sea, but do not affect supplies to Hungary through the Druzhba pipeline. Officials also said that by the end of the year they would refuse 90% of Russian oil imports, in exchange for which the EU plans to purchase energy carriers in Asia and Arab countries, as well as in the United States, but it will take time to adjust to new logistics. Due to the artificially limited supply on the black gold market and the growing demand for raw materials in Europe, Brent Crude Oil quotes showed a rapid increase and stopped at around 122.00 this week, updating the high of March 24.

Now the trading instrument is correcting in anticipation of the OPEC+ meeting, which will discuss the possibility of adjusting the production of "black gold" against the backdrop of the continuation of a special military operation in Eastern Europe, initiated by the Russian authorities, as well as its consequences for the energy market. Participants are expected to continue to adhere to the current 432K barrels per day production recovery plan, despite the EU authorities' decision.

Meanwhile, Saudi Arabia is ready to increase the production of "black gold" if it suddenly needs to compensate for the falling volumes from the Russian side. In turn, the United States offered Saudi Arabia to increase energy supplies to the EU and exclude Russia from the OPEC+ deal in exchange for unblocking arms supplies, but official Riyadh did not agree to take this step.

Summing up, one can conclude that if the increase in the rate of oil production by OPEC+ countries occurs according to a pre-approved plan, then prices will continue to rise in the future due to increased demand and insufficient supply. However, if a decision is made on an emergency adjustment in order to replace volumes of Russian oil, the instrument may head towards 100 in the long term.

oil-1.png

The long-term trend is upward. After updating the March 24 high, the price decreases and approaches the support level of 114.50, and if it is held by the "bulls", the growth will continue with the target at the May high. Otherwise, the correction will continue to the level of 107.15. The medium-term trend is upward. This week the target zone 2 (118.57–117.67) was broken out, and the next target is in the area of 127.57–126.67. Now the price is correcting and approaching the key trend support at 114.31–113.41, after reaching which new purchases can be considered with the first target at the high of the current week.

Resistance levels: 122, 129, 135 | Support levels: 114.5, 107.15, 101.9

oil-2.png
 

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