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Brent Сrude Oil Market is in a state of uncertainty

10/18/2022 2:08 PM

Last week, Brent Crude Oil prices decreased, correcting after a short rise caused by the decision of OPEC+ to cut production by 2.0M barrels per day. As a result, the price dropped to ​​92.00, where it is now. Currently, an uncertain situation has developed in the market that prevents the determination of the dominant trend: investors fear the onset of a global recession that can reduce oil consumption, but at the same time, they do not exclude a significant reduction in supply due to the actions of the cartel and the introduction of new sanctions against Russian exports.

Separately, it is worth highlighting two key factors affecting the market – the situation in the Chinese economy, which is the world's largest consumer of hydrocarbons, and the implementation of the OPEC+ decision. The Chinese economy is currently under increasing pressure due to the worsening epidemic situation: quarantine measures against COVID-19 slow down business activity and worsen demand, but the People's Bank of the country maintains support measures, and government officials say a continued increase in energy reserves, which could lead to increase their imports. Experts also doubt the decision to reduce oil production by 2.0M barrels per day, adopted by the OPEC+ countries, after which Saudi Arabia, as the cartel leader, began to be subjected to significant pressure from the United States, which considered this step unfriendly. Currently, official Washington is threatening Riyadh with various sanctions, including the deprivation of the status of a strategic partner and the cancellation of contracts for supplying weapons. In turn, the Saudi authorities continue to support the reduction, insisting that it is necessary to restore balance to the market, but it is possible that with continued political pressure, the size or timing of the reduction in oil production may be revised.

The trading instrument is in the support zone 93.75–91.15 (Murrey [7/8], Fibonacci correction 61.8%, the middle line of Bollinger bands), the breakdown of which will give the prospect of further decline to 87.50 (Murrey [6/8]) and 83.80 (area of ​​September lows). Otherwise, growth will resume towards 100.00 (Murrey [8/8], Fibonacci retracement 50.0%), 108.00 (Fibonacci retracement 38.2%).

Technical indicators do not give a single signal: Bollinger bands are reversing upwards, MACD is near the zero line, and its volumes are insignificant, but Stochastic has entered the oversold zone, not excluding the price reversal.

Resistance levels: 93.75. 100.00, 108.00. | Support levels: 91.15, 87.50, 83.80.

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