General analysis Brent for 27.09.2021
Current Dynamics
The hydrocarbon market has continued to grow for five trading sessions in a row. Brent is now ready to renew its three-year highs, with November futures already exceeding the mark of $79 a barrel. Falling oil production in the Gulf of Mexico has caused an increased demand for crude oil and gas ahead of the winter period. Inventories of major petroleum products in the USA are close to a three-year low. It is expected that weekly reports of the American Petroleum Institute and the Department of Energy to be published this week will reflect even larger reductions. However, global economic activity continues to grow and a supply deficit has formed on the world market.
Also, it should be taken into account that the meeting of the participants to the OPEC+ agreement will take place on 4 October, which will definitely affect further price formation. At the same time, it's already clear that not all signatories to the agreement provide the required volume of production. Countries such as Kazakhstan and Nigeria failed to meet the target level due to a lack of production capacity.
Additional support to commodities is provided by the falling ten-year bond yields and the general weakness of the dollar.
Tomorrow at 22:30 (GMT+2) the API will release its weekly crude oil inventory change report. Considering the growing demand and disruption in U.S. production and supply, the price of Brent may exceed $80 a barrel as early as tomorrow.
Support and Resistance Levels
On the 4-hour chart, the instrument is strengthening along the upper border of Bollinger Bands. The indicator is directed upward and the price range remains wide, indicating that the current trend continues. MACD histogram has reached the maximum values in the positive zone, maintaining a strong buy signal. Stochastic is consolidating near the edge of the overbought area, indicating an uptrend correction.
- Support levels: 73.10, 74.40, 75.80, 76.75, 77.60.
- Resistance levels: 79.05, 79.65, 80.00.
Trading scenarios
- It is possible to open long positions at the current price with a target of 80.50 and a stop-loss at 78.10. Implementation period: 1-2 days.
- Short positions should be opened below the level of 78.05 with a target of 76.70 and a stop-loss at the level of 79.15. Implementation period: 1-2 days.