General analysis Brent for 04.05.2022
Current Dynamics
Chevron reported a significant increase in profits. Iran has increased its oil exports. China’s independent refineries increased their buying of Russian oil. OPEC+ countries may not reach their allowed production levels.
The U.S. oil and gas company Chevron’s profit for the Q1 of 2022 increased almost four times, compared to the same period in 2021, and reached $6.3 billion. Meanwhile, Mexican oil company Pemex reported an increase its yearly profit by 60%, or almost $6 billion. It also said Pemex’s oil production has increased by 2.3% to 1.75 million bpd during the reporting period.
Meanwhile, in Latin America, Paraguay plans to negotiate with Venezuela on the possibility of resuming hydrocarbon trade. According to the representative of the Senate of Paraguay, Oscar Salomon Paraguay today needs cheaper fuel and Venezuela can sell it. Recall that Paraguay decided to break diplomatic relations with Venezuela and not to recognize the mandate of President Nicolas Maduro in January 2019.
Along with this, the authorities of Venezuela and Iran to sign an agreement on cooperation in the field of energy. Venezuela now buys condensate from Iran to dilute its crude oil. According to the analytical report of the Kepler Company, Iran’s oil exports increased by 30% in 2022 due to the shortage of raw materials and reached 870 thousand barrels per day.
Meanwhile, the European Union finalized a new package of sanctions, which provides for a gradual stopping of European countries’ buying of Russian oil in the next 6-8 months. However, Europe plans to make an exception for some countries, such as Slovakia and Hungary, because Russia covers 100% of their oil needs.
On this background, India’s Oil and Natural Gas Minister Hardeep Singh Puri said that India will continue to import oil from different countries, including Russia. He also said that the part of Russian oil imports to India does not exceed 0.2% and his country is open to cooperation on oil supplies if the price is satisfactory.
At the same time with China’s independent oil refineries have increased the purchase of Russian oil. The increase in purchases is due to the fact that Chinese state traders refuse to realize quotas directly because of fears of secondary sanctions from the USA and transfer them to private refineries.
Recall that since May 1, OPEC+ countries were allowed to increase oil production by 432 thousand barrels per day. However, not all countries were able to increase production within their quotas. At the end of February, the accumulated backlog of oil production was 1.1 million barrels per day. In March-April Russia has not reached the permitted level, from which we can conclude that the backlog will increase.OPEC+ ministers will next meet on May 5.
According to American Petroleum Institute (API) weekly crude inventories decline by 3.479M while experts expect a decline of 1.167M.Today at 16:30 (GMT+2) the Energy Information Agency (EIA) will release data on crude oil inventories. It is expected a decline of 0.829M in inventories.
Support and resistance levels.
Brent price broke through the key Fibonacci 38.3 level, after breaking through the 50 Fibonacci level. The current trend is bullish. RSI oscillator crossed below the 50 level and it is now below the 70 level.
- Support levels: 107.65,104.80,101.20, 98.75, 95.40
- Resistance levels: 120.05, 114.25, 110.65,
Trading scenarios
- Long positions can be opened from the level of 107.65 with a target of 114.75 and a stop loss of 104.80. Execution time: 1-3 days.
- Short positions can be opened below the level of 104.80, with a target of 101.20 and a stop loss of 107.65. Fulfillment period: 1-3 days.