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Oil market updates by Solidecn.com

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

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 139.53.

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

If the assumption is correct, after the end of the correction, the price will fall within the wave (iii) of a to the levels of 82.30–67. In this scenario, critical stop loss level is 131.17.

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Trading near local highs
During the Asian session, Crude Oil prices show flat dynamics, trading near the level of 118.5 and holding close to local highs from March 9.

The instrument is supported by an increase in energy demand with the beginning of the summer season in the US. Also, investors fear that a new EU sanctions package against the Russian economy, which includes a partial embargo on the supply of "black gold," may provoke a supply crisis in the market. Demand for hydrocarbons is also rising in China, where quarantine restrictions were eased in early June, and enterprises in Shanghai resumed their work.

Investors continue to evaluate the decision of OPEC+ members to increase production volumes to compensate for existing losses in supply chains after the introduction of anti-Russian sanctions against the background of the military conflict in Ukraine. Thus, in July, production will increase to 648K barrels per day instead of 432К barrels per day predicted by analysts, which is 0.7% of world demand. Market experts believe that the unpredictable decision of the cartel members is unlikely to significantly affect the dynamics of the instrument since, even now, the largest producers, excluding Saudi Arabia and the United Arab Emirates, are working at their limit.

On Tuesday, the quotes were under pressure from the American Petroleum Institute (API) report on oil stocks in the country. For the week of June 3, the indicator increased by 1.845M barrels after falling by 1.181M barrels in the previous period. On Wednesday, traders are waiting for the publication of the final report on oil reserves from the Energy Information Administration of the US Department of Energy (EIA).

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On the daily chart, Bollinger bands are growing moderately: the price range remains practically unchanged; however, it lets the "bulls" renew local highs. The MACD indicator grows, keeping a poor buy signal (the histogram is above the signal line). Having reached its highs, Stochastic reversed into a horizontal plane, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 119.1, 121, 123.30, 125 | Support levels: 115.79, 113.13, 110, 107.67

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Brent Crude Oil prices are holding near a 13-week high after China reported higher-than-expected exports in May, but new lockdown restrictions in Shanghai are holding back a faster gain.

For example, China's exports for May increased by 16.9% compared to last year, as the easing of restrictions related to the COVID-19 epidemic allowed some factories to restart. It was the fastest rise since January this year and more than doubled analysts' expectations of 8.0%. Imports also rose by 4.1% YoY, doubling the forecast of 2.0%. New social restrictions have been introduced in some areas of Shanghai. So, in Minhang, where about 2M people live, authorities asked residents to stay at home for two days to control the spread of the virus. At the moment, operational measures are being taken to avoid crowds and testing in places where cases of infection are recorded.

Meanwhile, in the US, there is an increase in commercial oil inventories, which casts doubt on further price increases. According to the Energy Information Administration of the US Department of Energy (EIA), the figure rose by 2.025M barrels, despite the forecast for their decline by 1.917M. According to the World Bank report, oil prices added 350% in two years alone, showing a record increase in two years period since 1973. The upward dynamics continue against the background of the escalation of the military conflict in Ukraine. Experts predicted that quotes would add up to 42% compared to the same period last year but already in 2023, the dynamics will correct, and there will be a decline of 8%, and in 2024 – by 13%.

Thus, we can conclude that if restrictions in China regarding COVID-19 weaken and the demand for gasoline and petroleum products grows due to the summer season, oil prices will continue to strengthen with an immediate target of 129.

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The long-term trend is upwards. This week, the price consolidated above 120, and the next target is 129, the breakout of which will allow the instrument to reach the area of 135. The key trend support is at 115.20. The RSI indicator is approaching the overbought zone, but it still allows considering trades along with the current trend.

The medium-term trend is upwards. After the breakdown of the target zone 2 (118.57–117.67) last week, the growth target was zone 3 (127.57–126.67). Long positions may be opened on the correction from the key trend support 117.14–116.24.

Resistance levels: 129, 135 | Support levels: 122, 115.2

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OPEC's ability to increase production has been exhausted.
Yesterday, OPEC Secretary General Mohammed Barkindo said that the cartel was running out of opportunities to increase the production of "black gold." According to the official, the production capacities of the participating countries, except for two or three states, are at their peak, and in this situation, there are practically no opportunities to influence the rise in prices. Barkindo added that the market could expect even more turmoil as China recovers from a new wave of the coronavirus pandemic and boosts demand significantly. He also called for increased investment in the oil and gas sector, although the US authorities have previously called for a stop to financing fossil fuels, switching to renewable energy.

During the hearings of the US Committee on Foreign Affairs, US State Department Senior Energy Security Adviser Amos Hochstein expressed concern that India had increased its purchases of Russian oil from 100K barrels per day to 800K and urged official New Delhi to curb this trend, despite strong dependence on supplies. One of the main reasons for the observed dynamics is a significant discount for the Urals brand relative to the oil price for Brent Crude Oil. According to the official, if the country refuses to import resources from the Russian Federation, then there will be no other buyer for them, so these purchases will not look like a blow to European and American consumers who have already refused to cooperate with the Russian authorities under the sixth economic package sanctions.

Thus, there are almost no factors that can put pressure on the asset's quotes on the market now, in connection with which many experts spoke about the possibility of oil prices rising to 150 dollars or more by the end of 2022.

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After the breakout of the upper border of the Triangle pattern, the price works out a signal to open long positions. At the moment, indicator Alligator's EMA oscillation range is actively expanding upwards, and the histogram of the AO oscillator is forming rising bars high in the buying zone.

Resistance levels: 122.2, 130 | Support levels: 113.8, 97.5

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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.

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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.

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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 - The price may fall

If the assumption is correct, Brent Crude Oil price will fall within the wave c of 2 to the levels of 77.08 – 62.50. In this scenario, critical stop loss level is 139.53.

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Crude Oil: prices are recovering after a sharp decline last week
Quotations are supported by data indicating growing imports of oil and oil products from China. According to the report of the General Administration of Customs of China, "black gold" from Russia is sent to the country both by sea and through the Eastern Siberia–Pacific Ocean pipeline. In May, deliveries reached 1.98 million barrels per day, which was a record value, exceeding the April figure by a quarter, while for liquefied gas this figure was fixed at around 400 thousand tons, adding 56% compared to May 2021. Analysts note that the discount policy adopted by Russian officials against the backdrop of sanctions imposed after the start of the military conflict in Ukraine contributes to the increase in imports.

Investors expect that the recovery of the Chinese economy will contribute to a further increase in demand for petroleum products, which will support prices at current levels or contribute to their growth. In turn, fears about possible interruptions in Russian supplies to Western countries still persist. By the end of this year, the EU intends to significantly reduce the volume of imports of oil from the Russian Federation, and then to find alternative sources altogether.

In the near future, investors expect the publication of statistics from the American Petroleum Institute (API) on the dynamics of "black gold" reserves for the week ended June 17. The previous report showed a weak increase of 0.736 million barrels, which, however, put additional pressure on the quotes.

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Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is expanding, while remaining spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). In addition, the indicator is testing the zero level for a breakdown. Stochastic, having approached the level of "20", reversed into a horizontal plane, indicating the growing risks of oversold instrument in the ultra-short term.

Resistance levels: 114.09, 116, 120, 123.24 | Support levels: 112, 109, 106, 102.57

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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.

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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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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.

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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.

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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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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.

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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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