Brent: price growth has resumed

18 April 2018, 14:07

According to the American Petroleum Institute (API), which was published on Tuesday evening, oil reserves in the US fell by 1 million barrels in the week of April 7 - 13, while gasoline and distillate stocks fell by 2.5 million barrels and 0.854 million barrels, respectively.

Against the background of forecasts of the stocks falling in the US, oil prices rose on Wednesday. Futures for Brent crude at ICE recently rose in price by 0.68%, to 72.00 dollars per barrel. Futures for oil WTI on NYMEX added 0,83%, to 67.00 dollars per barrel.

On Wednesday (14:30 GMT), the US Energy Information Administration (EIA) will publish an official report on reserves. Economists expect the fall in oil and oil products stocks in the week of April 7 - April by 1.429 million barrels against the growth of 3.306 million barrels the previous week.

In anticipation of a positive outlook for oil reserves and after the API report, the spot price for Brent crude rose at the beginning of the European session to $ 72.00 per barrel. In the oil market there is again an increased interest of investors in purchases.

At the end of last week, oil prices reached the highest level in more than three years. At the weekend, a coalition led by the United States struck a missile strike on Syria, which increased geopolitical risks, as well as the risks of possible interruptions in the supply of oil from the Asian region.

Coupled with the likelihood of the US imposing sanctions against Iran, such a situation could lead to a crisis in the supply of oil. Iran is the largest supplier of oil, possessing about 10% of all the world's proven oil reserves. And if sanctions are imposed on Iran again, the country will not be able to supply oil to the world market, which inevitably entails a decrease in the world supply of oil and, consequently, a rise in prices for it.

As you know, OPEC and 10 other oil-producing countries, including Russia, have reduced total production by 1.8 million barrels a day since the beginning of last year. The term of the agreement, aimed at limiting the excess of the world supply, expires at the end of 2018.

On Friday in Saudi Arabia, OPEC ministers will discuss the possibility of maintaining oil production restrictions next year.

Last month, the media reported that OPEC intends next year to continue joint efforts to reduce the supply of oil.

If the parties to the production cut-off agreement decide to extend the agreement for the next year under this agreement, even the growing oil production in the US will not be able to influence the prospect of further price increases. According to Baker Hughes data, published last Friday, the number of active oil drilling rigs in the US increased by 7 units to 815 units. According to a recent report by the International Energy Agency (IEA),

The United States increased oil production by 1.34 million barrels per day in comparison with last March, ranking second in the world in terms of oil production after Russia, outstripping Saudi Arabia.

Geopolitical risks that can lead to supply disruptions, as well as OPEC's intention to extend the agreement on limiting oil production, increase the pressure on oil prices towards their further growth. Even despite the growth of oil production in the US, the world oil supply will not be able to cover the demand for it in this case.

As the UAE Energy Minister Suhail Al-Mazrui, who is the OPEC president at the time, said earlier, OPEC is now "more concerned about the supply shortage than its excess". Rally oil prices, it seems, is not going to end.

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Support levels: 70.75, 70.00, 68.50, 66.70, 66.00, 65.00, 63.00, 62.40, 60.00, 57.50

Resistance levels: 72.00, 73.00, 73.50


Trading Scenarios

Sell Stop 70.70. Stop-Loss. Take-Profit, 70.00, 68.50, 66.70, 66.00, 65.00, 63.00

Buy Stop 72.10. Stop-Loss 70.70. Take-Profit 73.00, 73.50, 75.00

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