Yesterday, oil prices rose sharply. According to analysts of the oil market, several factors contributed to this.
The first reason is the strengthening of geopolitical tensions in the Middle East in connection with the referendum in Iraqi Kurdistan. Prices jumped after Turkish President Recep Tayyip Erdogan threatened to close the oil pipeline, through which Kurdistan oil is supplied to the world market.
On the other hand, although the meeting of OPEC and a number of other oil-producing countries held on Friday did not lead to an extension of the contract for limiting production, a statement was made about a higher degree of compliance with quotas. In addition, a number of countries signaled their readiness to extend the deal to reduce production in 2018.
As a result, on Monday, oil prices reached a maximum in more than two years. The barrel of Brent crude oil was worth 58.55 dollars at the end of yesterday's trading day.
At the auctions in Asia today oil continued to go up. Brent crude futures for ICE Futures Europe rose 0.08% to 59.07 dollars per barrel. The spot price for Brent crude oil reached 58.80, the highest level in the last two years.
However, at the beginning of the European session, the price of oil is falling, including because of the strengthening dollar.
Today at 16:45 (GMT), the speech of the head of the Federal Reserve, Janet Yellen will start in Cleveland, and on Thursday the vice-chairman Stanley Fischer will speak. Last week, the Fed hinted that this year it could raise rates again. According to the CME Group, investors estimate the probability of an interest rate increase in December at 72.8%. And now investors are hoping to get new information about the course of monetary policy of the Fed.
Today (at 20:30 GMT), the American Petroleum Institute (API) will publish its weekly report on oil and petroleum products in the US. If the API report indicates a reduction in stocks, then oil prices will receive additional support. The official weekly report from the US Department of Energy on oil and petroleum products will be released on Wednesday (14:30 GMT). The stock is expected to grow by 2.296 million barrels, which should also support prices.
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Support and resistance levels
The price for Brent crude oil broke yesterday the upper limit of the upward channel on the daily chart and reached the level of 58.45 (highs of 2017). The last time at these levels the price was two years ago, in July 2015. The price has been growing for the third month in a row, keeping positive dynamics above the key support level of 54.70 (EMA200 on the weekly chart). Here, the upper limit of the descending channel passes on the weekly chart.
The decline scenario will be associated with a return to the level 54.70 inside the downlink on the weekly chart, the lower limit of which passes near the level of 36.05 (the Fibonacci level of 23.6% correction to the decline from the level of 65.30 from June 2015 to the absolute minimums of 2016 near the 27.00 mark) . The breakdown of support levels 51.50 (EMA200 on the daily chart), 50.70 (Fibonacci level 61.8%) raises the risks of price return to the bearish trend with targets at support levels of 50.00 (lows in August), 48.75, 48.00, 46.20 (50% Fibonacci level) 44.50 (lows of the year), 41.70 (Fibonacci level 38.2%), 36.05 (bottom line of the descending channel on the weekly chart).
So far, positive dynamics have prevailed. Technical indicators (OsMA and Stochastic) on the daily, weekly, monthly charts are on the buyers’ side.
The next medium-term goal in the case of continued growth will be the resistance level of 62.00, near which the lines EMA144, EMA200 pass on the monthly chart.
Support levels: 58.00, 57.45, 56.75, 55.85, 55.00, 54.70, 53.75, 51.50, 50.70, 50.00
Resistance levels: 58.45, 59.00
Trading Scenarios
Sell Stop 57.70. Stop-Loss 58.20. Take-Profit 57.45, 56.75, 55.85, 55.00, 54.70, 53.75, 51.50, 50.70, 50.00
Buy Stop 58.20. Stop-Loss 57.70. Take-Profit 58.45, 59.00, 60.00
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