General analysis Brent for 23.03.2022

Current dynamics

The price of Brent crude oil is rising on Wednesday and is currently trading above $117 per barrel. Several significant factors point to further strengthening of the trading instrument. Yesterday the upside driver for the hydrocarbons market was the publication of the US Oil Institute's report on the weekly change in US crude stocks. Oil inventories were expected to rise by 0.25 million barrels over the week, but the actual data showed a decline of more than 4 million barrels. Meanwhile European Union leaders are discussing the possibility of an oil embargo against Russia. At the same time, all eurozone countries understand that a sharp restriction on the volume of Russian oil and gas purchases will lead to significant negative consequences in the European economy, and quickly abandoning Russian energy resources is not a rational solution. There is unanimity among EU leaders on the need to weaken Russian power, but the topic of abandoning Russian hydrocarbons is creating controversy within the collective west. The EU is looking for new oil supply chains and alternatives to Russian gas in the first place. The Italian prime minister is ready to announce an oil embargo, while Germany, the region's largest economy, has taken a very cautious stance.
In addition, it is worth noting that Russia has shut down oil deliveries via Kazakhstan, increasing pressure on the oil market. The measure was taken to repair a pipeline which was damaged during the storm. Another unexpected decision by the Russian authorities was the announcement of their intention to settle with their European partners in roubles, as the collective West has frozen the country's gold reserves, which, according to Vladimir Putin, discredited their own currency. The OPEC+ alliance is not going to increase production, while Russia is working on a plan to increase supplies to China and India, which would also strengthen the yuan and rupee.
Today also saw the release of the US Department of Energy's weekly inventory report, which expectedly confirmed a decline in the country's main petroleum products. The US President flew to Europe for a meeting with EU leaders. Obviously, Biden will push for a complete divestment from Russia's oil and gas sector, which will have little effect on the USA, but for the EU, the measure could cause a major crisis within the European Union.
Before the end of this week, the trade instrument will be influenced by the negotiations of EU leaders among themselves and with Washington. Russia's decision to settle in roubles is not yet fully embedded in the market dynamics. Investors await the publication of the plan from the Russian authorities.

Support and resistance levels

On the 4-hour chart, the instrument is testing the upper boundary of the Bollinger Bands, which is the nearest resistance level. The indicator is pointing upwards and the price range has widened, indicating a continuation of growth. The MACD histogram is in the positive zone, maintaining a buy signal. Stochastic has entered the overbought area, no signal to enter the market has been formed.

• Support levels: 96.20, 101.50, 105.75, 106.65, 112.90.
• Resistance levels: 118.35, 122.00, 125.80, 129.60.

Trading scenarios

• Long positions can be opened at the current price with a target of 125.80 and a stop loss at 112.80. Implementation period: 1-3 days.
• Short positions should be opened below the level of 112.80 with a target of 108.70 and a stop-loss at the level of 114.40. Implementation period: 1-3 days.