General analysis Brent for 14.03.2022

Current dynamics

Brent crude oil continued to fall on Monday and is currently trading near the support level of 102.00. Several significant factors are keeping pressure on the trading instrument at the beginning of the new trading week. 
Market participants continue to follow developments in Ukraine. According to the Ukrainian side, the negotiation process has become more productive. The oil market is counting on the convergence of the conflicting parties, which contributes to the drop in the price of hydrocarbons.
Another oil market driver is the new outbreak of Covid-19 in China. The number of people infected rose sharply on Saturday, becoming the highest in 2 years. The Chinese authorities have tightened social distancing measures in some provinces and major cities. Shenzhen and Shanghai have announced a week-long lockdown. The new covid restrictions will slow economic activity and weaken demand in the hydrocarbon market.
In the meantime, the USA is calling on the biggest oil producers to increase production in order to stabilise prices. In addition the US authorities are in talks with Iran and Venezuela to lift sanctions in response to increased production. Earlier Russia demanded a written guarantee in the framework of the nuclear deal from Washington which would not limit the economic interaction between Moscow and Tehran. The US insists on maintaining full-fledged sanctions against Russia, so the chances of Iranian oil appearing on the market in the near future have diminished. It is also worth noting that Libya is not ready to give up Russian oil grades. It will take 5-7 years for the state to replace Russian oil.

Tomorrow at 13:00 (GMT+2) the OPEC will publish its monthly oil market report. Also on Wednesday at 22:30 (GMT+2), the API will release data on the weekly change in US crude inventories.

Support and resistance levels

On the 4-hour chart the instrument is correcting at the lower boundary of Bollinger Bands, which is the nearest support level. The indicator is pointing downwards and the price range has contracted, indicating a possible change in the current trend. The MACD histogram is in the negative zone, maintaining a sell signal. Stochastic has entered oversold area, strong buy signal may be formed in the next 1-2 days.

• Support levels: 89.55, 96.95, 102.20.
• Resistance levels: 107.30, 111.60, 118.40, 123.00, 128.59.

Trading scenarios

• Short positions should be opened below the level of 101.40 with a target of 98.20 and a stop-loss at 103.05. Implementation period: 1-2 days.
• Long positions can be opened above the level of 104.15 with a target of 110.40 and a stop-loss at 101.30. Implementation period: 1-2 days.