General analysis Brent for 16.02.2022
Current Dynamics
Brent crude oil is recovering on Wednesday after losses the day before. Yesterday's significant drop was catalyzed by the reduced tension between Russia and Ukraine. Russian troops from the Western and Southern Military Districts are returning to their bases. At the same time, the collective West continues to assert the high probability of a Russian military invasion of Ukraine, which provides moderate support to the hydrocarbon market.
Oil also strengthened after the release of API's weekly change in U.S. crude inventories, which showed a decline of 1.076 million barrels. The industrial activity is recovering, with U.S. auto sales picking up in recent months, so refineries have increased production, taking advantage of the situation to get high margins on fuel.
Finally, the third positive fundamental factor is that OPEC+ participants maintain their commitment to increase the production of "black gold". Moreover, the major oil producers have not been able to fully work out the quotas for several months in a row, increasing the supply deficit in the market.
Today at 18:30 (GMT+2) the EIA will publish a report on weekly change of major oil products inventories in the U.S.
Support and Resistance Levels
On the 4-hour chart, the instrument is holding above the Bollinger Band Moving Average, which is the nearest support level. The indicator is turning sideways and the price range has contracted, indicating corrective dynamics. The MACD histogram is in the positive zone, preserving a buy signal. Stochastic entered the overbought area, a strong sell signal may be formed in the coming hours if market participants begin to fix profits in mass on long positions.
- Support levels: 85.30, 87.80, 90.70, 92.65.
- Resistance levels: 94.30, 95.45, 96.00, 96.25.
Trading scenarios
- Long positions can be opened at the current price with a target of 96.40 and a stop loss at 91.55. Implementation period: 1-3 days.
- Short positions should be opened below the level of 91.80 with a target of 90.60 and a stop-loss at the level of 92.25. Implementation period: 1-2 days.