General analysis Brent for 26.04.2022
Current Dynamics
The U.S. has declared signs of contracts for the first round of releases of oil from strategic reserves. Europe begins to buy oil from the Middle East. Rystad Energy - Brent crude may cost $180 a barrel in Q4 of this year. Japan begins process of selling first batch of oil.
The US declared sale of first 30 million barrels of oil from strategic reserves. Twelve contracts were signed The largest deals were on 6.85 million barrels with Valero Marketing and Supply, 4.05 million barrels with Motiva Enterprises, 3.6 million barrels with ExxonMobil, 2.75 million barrels with Shel, 2.6 million barrels with Glencore, 2.4 million barrels with Marathon Petroleum and 2.5 million barrels with Phillips 66. The next release of oil from U.S. strategic reserves is in May, then in mid and end of June.
Meanwhile, gas stations in Haiti are massively closing, but the government denies fuel shortages. Workers in the transportation industry in western Panama suspended regular flights in protest of higher fuel prices. Mass strikes begin in the Dominican Republic, one of the protesters' demands is to lower fuel prices.
According to Rystad Energy analysts, oil demand is expected to decrease by 1.4 million barrels per day until 2023. Nevertheless, if the conflict in Ukraine will drag on and European countries will impose an energy embargo on Russia, Rystad Energy expects that Brent oil in the Q4 may cost $180 per barrel. It is worth noting that Europe has begun to substitute Russian oil. It is expected that at the beginning of May a million barrels of oil will be shipped to the UK ports from UAE. This is the first such shipment in the last 2 years.
At this time, Iran, despite the sanctions, increases oil production in the Persian Gulf. The Sahar 2 offshore rig was delivered to the area of operation in Kharg. It is worth noting that the fifth round of talks between Iranian and Saudi Arabian foreign ministers took place in Baghdad. Countries are planning to exchange diplomatic missions and agreed on the rules of visiting Islamic shrines by Iranian ladles.
At the same time, Saudi Arabia and its allies refused to fulfill the terms of the truce with Yemen's Hussein rebels and refused to allow transport planes carrying humanitarian aid to Sanaa airport through their airspace.
Meanwhile, Japan opened a tender to sell 4.8 million barrels of oil from national reserves to stabilize oil prices. The Ministry of Economy and Trade of Japan specified that the tender for the sale of national oil reserves was announced as part of cooperation with the International Energy Agency. The tender will be held on May 10.
Today at 22:30 (GMT+2) the American Petroleum Institute (API) will publish data on weekly U.S. crude oil inventories. Tomorrow at 16:30 (GMT+2), the Energy Information Agency (EIA) will release data on crude oil stocks. Expect an increase in stocks by 2.167M.
Support and resistance levels.
Brent quotations dropped below the key 23.6 Fibonacci level, but failed to fix below it. After returning above the 23.6 Fibonacci level, quotations moved to a consolidation in a large range. The RSI oscillator crossed the 30 level from the bottom to the top and its value remained below the 50 level.
- Support levels: 101.20, 98.75, 95.40
- Resistance levels: 120.05, 114.25, 110.65, 107.65,104.80
Trading scenarios
- Long positions can be opened from the current level with a target of 107.65 and a stop loss of 98.75. Implementation time: 2-4 days
- Short positions can be opened below the level of 98.75 with the target of 95.40 and stop-loss 101.20. Implementation time: 2-4 days