General analysis Brent for 24.11.2021
Current Dynamics
This week oil prices are recovering after a strong fall the day before. The major oil consumers, such as the U.S., China, India, Japan, South Korea and the UK agreed to sell their own strategic reserves to stabilize prices at the hydrocarbon market. Yesterday, the U.S. president announced about allotment of 50 mln barrels from the strategic reserves, with the taken volumes to be returned in 2022-2024. Thus, the strategic reserves are a commodity credit, and the need for repayment will contribute to future deficits.
Investizo believes that this measure is not entirely productive. The impact on the market will be short-lived, and OPEC+ will retain control of the market, as confirmed the recovery of prices after a short-term downturn.
Another pressure factor on the trade instrument is a new wave of pandemics in Europe and China. Recall that China also intends to release some of its strategic reserves. At the same time the slowdown in industrial activity caused by the pandemic will not be enough to put a strong pressure on the oil market, given the volumes available from the strategic storage facilities.
The next meeting of the participants of the OPEC+ agreement will be held on December 2. Earlier the largest oil producers refused the U.S. to revise the production volumes in favor of an increase. Given the demand forecasts for the next year, oil will continue to strengthen in the long term.
Today at 15:30 and 17:00 (GMT+2), a number of important macroeconomic indicators are expected to be published in the U.S. The news background may cause strong volatility in the market ahead of Thanksgiving Day. At 17:30 (GMT+2) the EIA will release its weekly report on commercial crude oil inventories.
Support and resistance levels
On the 4-hour chart the instrument is consolidating near the upper Bollinger band. The indicator has reversed upward and the price range has widened, indicating a continuation of the uptrend. MACD histogram is growing in the positive zone, holding a strong buy signal. Stochastic is preparing to leave the overbought area, a sell signal may be formed during the day.
- Support levels: 76.40, 78.00, 79.40, 81.17.
- Resistance levels: 82.30, 83.85, 84.50, 85.55.
Trading scenarios
- Long positions can be opened at the current price with a target of 83.90 and a stop loss at 80.40. Implementation period: 1-2 days.
- Short positions should be opened below the level of 80.30 with a target of 78.15 and a stop-loss at 81.30. Implementation period: 1-3 days.