General analysis Brent for 16.03.2022

Current Dynamics.

OPEC has not changed its forecasts for oil demand growth, but is ready to revise it in the coming weeks. Oil continues to fall in price and trades below $100.

OPEC maintains its forecast of a 4.2 mb/d rise in global oil demand but is ready to revise it in the next few weeks as world conditions become clearer.

There were also published forecasts of growth in hydrocarbon production in non-OPEC countries. Thus, oil production in the U.S. was revised upward. The organization expects production growth to 11.84mbpd instead of 11.79mbpd indicated in its previous forecast.

However, these volumes will not be able to substitute Russian oil on which the USA imposed sanctions. The White House's attempts to reach an agreement with Venezuela were unsuccessful. However, the U.S. State Department said it is not even considering the option of replacing Russian oil with Iranian oil.

In the Middle East, behavior of the old U.S. ally in the region, Saudi Arabia should be noted separately. After the White House held talks with Iran on the "nuclear deal" Riyadh declared about a possible transition to the yuan in oil trade with China. Currently, about 25% of all oil produced in Saudi Arabia is bought by the Celestial Empire.

Oil prices have been falling in expectations of bad macroeconomic data from China, however the data have been better than experts expected. Thus, the industrial production in the Celestial Empire has increased by 7.5% YoY in February. Separately, it is worth noting that investment in industry grew by 20.9%. At the same time, Chinese authorities imposed a lockdown in Shenzhen due to the outbreak of coronovirus, which may put pressure on oil prices in the short term.

Yesterday the data published by American Petroleum Institute showed an increase in oil reserves by 3.754m barrels. EIA crude reading today showed oil demand grew 4.345mb rather than a 1.375mb decrease, however gasoline stocks decreased by 3.616mb, when it was expected to decrease by 1.579mb.

Support and resistance levels.

Yesterday the Brent crude broke through a key level of 76.4 Fibonacci retracement to stay below $101.75 per barrel. The instrument is trading in a wide sideways corridor below 76.4 Fibonacci. A convergence reversal pattern has formed on the RSI oscillator. The RSI has crossed the 30 level from the bottom to the top and continues to grow.

• Support levels: 96.52, 92.60, 88.50
• Resistance levels: 131.05, 122.00, 116.50, 111.85, 107.35

Trading scenarios

• Long positions can be opened above the level of 101.75 with a target of 116.50 and a stop loss of 96.52. Implementation period: 1-3 days
• Short positions can be opened below the level of 96.52 with a target of 88.50 and a stop loss of 101.75. Implementation period: 1-3 days