Brent Crude Oil: global recession risks increase pressure on the instrument
Brent Crude Oil prices are falling to 101.50 amid investors’ fears about the global economy going into recession due to the ongoing military conflict in Ukraine and persistently high inflation in developed countries. Another negative factor for hydrocarbon prices is the discussion by the United States and G7 allies of setting a ceiling price for Russian oil at 40–60 dollars per barrel to reduce energy sales revenues to the Russian Federation’s national budget as part of the sanctions policy.
Thus, we can assume that the fall of the trading instrument will continue in the medium term, and the target for sales will be the March low of 98.00.
The long-term trend in the oil market remains upward. The key support for the trend is at 98; after holding it, the growth will continue with the target at the June high. Otherwise, the asset may decline to 91.1 and 86.3.
The medium-term trend is downwards. This week, the target zone 2 (108.93–108.06) was broken, which suggests a further decline in prices towards zone 3 (100.23–99.36). The key resistance of the trend is shifting to 110.16–109.31, from where it is worth considering new short positions.
Resistance levels: 107.75, 119.10, 125.65 | Support levels: 101.50, 98., 91.1
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Crude Oil - the oil market is correcting after the collapse
After a significant decline last week, the trading instrument moved to an upward correction caused by statements by the state oil company of Saudi Arabia, Saudi Arabian Oil Company, that a supply crisis does not threaten the oil market, as it has an additional production capacity of 1.5M barrels per day, which can be used if necessary. Although this level cannot be maintained for long, it will be enough to compensate for the lack of oil while other members of OPEC+ increase their production. Confidence that Saudi Arabia has these opportunities is added by the announced goals of the Saudi Arabian Oil Company to increase production from 12M barrels to 13M per day by 2027. Also, the US authorities are actively trying to negotiate with Asian countries on setting marginal prices for Russian oil around 40–60 dollars per barrel. Moscow has already stated that it will not trade energy resources in such conditions. If this happens, then, according to experts, oil prices will be able to exceed 300 dollars per barrel.
On the global chart, the trading instrument is moving below the global support line, limiting the possibility of long-term growth. Technical indicators maintain an increasing sell signal: fast EMAs of the Alligator indicator are moving away from the signal line, and the AO oscillator histogram is forming downward bars in the sell zone.
Resistance levels: 108.22, 113.66 | Support levels: 98.57, 92.4
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