General analysis Brent for 08.04.2022
Current Dynamics
The International Energy Agency plans to release 120 million barrels of oil. In Russia, oil production may decrease by 4-5% by the end of April. A Yemeni oil company claimed that its tankers were seized.
The International Energy Agency (IEA) disclosed the volume of oil to be released from the countries' strategic reserves. When the conflict between Russia and Ukraine began, the IEA had 1.5 billion barrels in state reserves and about 575 million barrels in commitments to industry. That means the 120 million barrels approved for release in April and the 62.7 million barrels released in March represent 9% of IEA member countries' total reserves.
Thus, the USA will release 60.559 million barrels under IEA deal and 120 million barrels more independently. Second country in volume of oil release from strategic reserves will be Japan which will release 15 million barrels, in the third place South Korea which will release 7.23 million barrels.
It is worth noting the growth of key rate of clean tanker freight in the Gulf of Mexico. In the direction of Chile, the freight cost increased by 22%, by 25% to the Caribbean, by 38% to Brazil. Thus, the cost of shipping medium-range clean oil products on international U.S. routes exceeded the levels of 2020, when there was a boom in floating oil storage.
Meanwhile, Guatemala's Ministry of Energy issued a decree introducing diesel and gasoline subsidies to curb prices. Subsidies will be given to fuel distribution points to reduce the price by $0.65 per gallon for diesel and $0.33 per gallon for gasoline.
Russia may reduce oil production by 4-5% in April, Russian Deputy Prime Minister Alexander Novak said.
Meanwhile, in the Middle East, the President of Yemen announced the creation of the Presidential Council and gave it the power to govern the country. At the same time, the Yemeni Oil Company claimed that an oil tanker had been captured by the Saudi-led Arab coalition. However, Saudi Crown Prince Mohammed bin Salman met with the Yemeni Presidential Council. Saudi Arabia welcomed the creation of the Presidential Council and urged it to begin negotiations with the pro-Iranian Ansar Allah movement. The UAE and Saudi Arabia also plan to allocate $1 billion for oil products and to provide $2 billion to the Central Bank of Yemen.
EIA crude oil information showed a build build increase of 2.421 million barrels rather than a 2.056 million barrel decline, and weekly gasoline inventories which increased by 0.771 million barrels while it was expected to decrease by 0.819 million. Also it was estimated that distillate stocks decreased by 2.041mb, whereas it was expected to increase by 0.063mb. This news caused Brent prices to decrease.
Support and resistance levels.
Brent is consolidating below the key Fibonacci level of 23.6. The current trend is downward. Quotes are near the March lows .The RSI Oscillator is on the downside above the 30 level.
- Support levels: 98.75, 95.40
- Resistance levels: 120.00, 114.25, 110.65, 107.65, 104.80,101.20
Trading scenarios
- Short positions can be opened below 98.75 level with a target of 95.40 and a stop loss of 101.20. Implementation period: 1-3 days
- Long positions can be opened from the current level with a target of 104.80 and a stop loss of 98.75. Implementation period: 1-3 days