Brent: price reduction risks _28/07/2016

Trading recommendations

Sell ​​in the market. Stop-Loss 44.60. Take-Profit 43.00, 41.70, 40.00, 39.00, 36.05

Buy Stop 44.70. Stop-Loss 44.10. Take-Profit 45.65, 46.20, 47.30, 48.00, 49.00, 49.40, 50.00, 50.70


Technical analysis

With the opening of today's trading day on the oil quotes continue to decline.

Reduced prices in July completely blocked its growth over the previous two months. The price is at around mid-April. After the US Department of Energy reported yesterday that the growth of oil reserves in the country, the price of oil fell sharply, dropping to below the level of 43.50 marks. Brent crude fell yesterday almost $ 1.2 per barrel.

On the daily chart the price has broken the bottom line of the descending channel and is located below the key 46.20 level (Fibonacci level of 50% and EMA200 daily chart), 45.65 (EMA144).

Indicators OsMA and Stochastic on the 4-hour, daily, weekly charts defected to the sellers.

The price of oil continues to be under pressure from powerful negative impulse of a fundamental nature.

The immediate goal of further reducing the level could be 41.70 (Fibonacci 38.2% correction to decrease with the level of 65.30 to lows near the 2016 mark of 27.05). In case of further reduction in the levels of 36.05 (23.6% Fibonacci level) will become targets, 32.30, 30.00.

Return is above the level of 47.30 (EMA200 on 4-hour chart) return the price of oil upward momentum.

Under pressure from the fundamentals look rather short positions.

Support levels: 43.30, 41.70, 39.00, 36.05

Resistance Levels: 44.50, 45.65, 46.20, 47.30


Overview and Dynamics

As already known, the Fed announced its decision to leave short-term interest rates unchanged at 0.5%, saying that "short-term risks to the economic outlook have decreased."

For a short time the dollar has appreciated sharply in the foreign exchange market after the Fed statement, as the text of the Fed statement could mean that a rate hike could come as early as September.

However, the Fed did not give a clear signal to raise interest rates this year. As a result, investors' mood changed, and the US dollar fell against most currencies, as of the Fed statement it should be that the regulator was not defined with their future plans regarding the US monetary policy.

Today, with the opening of the trading day the US dollar continues to decline against most currencies, however, the oil price also falls.

After the US Department of Energy announced yesterday an increase in US oil inventories at the storage tanks 1.671 million barrels instead of the expected reduction of 2.257 million barrels of oil quotes have collapsed to the level of 43.50 dollars per barrel of Brent crude oil.

Stocks in the US storages are redundant. Excess current level of inventory compared with the average value for similar date last 5 years is more than 30%. In the United States the size of oil reserves is located on the highs of the last 80 years, exceeding the amount of 500 million barrels.

The concern of investors in the world about excessive oil supply led to a reversal in prices after the rally, which lasted five months, during which in June had reached highs near USD 52.80 mark per barrel of Brent crude oil.

At the same time, despite the fears of investors, in the United States continues to increase the number of active drilling rigs. According to the latest report of the oilfield services company Baker Hughes, the number of active rigs in the US increased to 371 units, and the positive dynamics has been observed for the fourth consecutive week.

The continued uncertainty in the global economy against the backdrop of Brexit UK, also contribute to lower prices for commodities, including oil.

Thus, according to many analysts of the oil market, the probability of the movement in oil prices to 40 dollars per barrel increases.