General analysis Brent for 04.04.2022
Current dynamics
Over the past week Brent crude oil has lost around 13% of its value. This is the biggest weekly drop since April 2020. At the end of last week the US announced it would release strategic oil reserves at the rate of 1 million barrels per day for six months from May. The initiative of Americans was supported by 30 member countries of the International Energy Agency which are also ready to release strategic reserves to take control of oil prices. At the same time, a sharp sell-off led to a drop in prices, but experts suggest that the effect on the hydrocarbon market will be short-lived.
Investors remain wary of a supply shortage in the market. The fighting in Ukraine continues. European countries want to strengthen sanctions against Russia. Geopolitical risks are intensifying, so oil could recover during the week. A big pressure is now on Germany, which cannot give up Russian energy resources without devastating consequences for its economy, which its EU and NATO allies are actively demanding.
Another important pressure on oil is the rising incidence of COVID-19 in China. The Chinese authorities have extended tight social distancing measures, which will clearly affect production activity and domestic demand for energy.
On Wednesday at 16:30 EIA will release its weekly report on crude oil and major oil product inventories.
Support and resistance levels
On the 4-hour chart, the instrument is testing the Bollinger Bands moving average, which is the nearest resistance level. The indicator is pointing downwards and the price range has contracted, indicating an imminent change in the current trend. MACD histogram is in the negative zone, maintaining a sell signal. Stochastic is approaching the overbought area from below, no signal to enter the market has been formed.
- Support levels: 92.35, 96.50, 100.90, 103.70.
- Resistance levels: 106.00, 108.90, 110.95, 116.40, 121.25, 125.30.
Trading scenarios
- Long positions can be opened above the level of 106.00 with a target of 111.00 and a stop loss at 104.50. Implementation period: 1-3 days.
- Short positions should be opened below the level of 103.60 with a target of 99.20 and a stop-loss at 106.40. Implementation period: 1-3 days.