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Oil Prices are Ambiguous

11/16/2022 12:02 PM

During the Asian session, prices for WTI Crude Oil are slightly reduced, testing 85.60 for a breakdown.

Yesterday, the trading instrument showed uncertain growth, but it failed to consolidate on new levels due to a sudden increase in demand for the US currency after reports of the fall of two missiles in Poland. Investors fear that such events may cause an additional escalation of the Russian-Ukrainian conflict, increasing the risks of lower demand for hydrocarbons and additional restrictions on the import of Russian raw materials. Also, yesterday it became known that Ukraine suspended the transfer of Russian "black gold" through the Druzhba oil pipeline due to problems with electricity.

Additional pressure on the quotes of the asset was exerted by the results of the report of the International Energy Agency (IEA): the report states that by the end of 2022, oil production will increase by 4.6M barrels per day to 99.9M barrels, and next year a smaller increase is expected by 0.74M barrels to 100.7M barrels per day, while the demand forecast for next year decreased by 40.0K barrels per day from 2.1M to 1.6M.

In its autumn economic report, the European Commission predicts a decrease in the average price of Brent Crude Oil by 24% by 2024, from 101.8 dollars to 78.0 dollars per barrel. Analysts explain that this year the quotes received support against the background of the uncertainty of energy supplies as a result of the strengthening of the sanctions policy against the Russian economy after the outbreak of the military conflict on the territory of Ukraine. Thus, the oil embargo will come into force on December 5, and oil products on February 5. Also, the OPEC+ decision to cut crude production by 2.0M barrels per day in November and December supported high prices. The head of the IEA, Fatih Birol, considers it necessary to reconsider the cartel's decision since it contributes to inflation, significantly weakening the economy, especially in developing countries.

On the daily chart, Bollinger bands are slightly decreasing: the price range remains almost unchanged but remains quite spacious for the current level of activity in the market. The MACD indicator is falling, keeping a relatively strong sell signal (the histogram is below the signal line). After a short attempt to grow last week, Stochastic reverses into a downward plane, indicating the dominance of "bearish" sentiment in the ultra-short term.

Resistance levels: 87.00, 88.52, 90.00, 92.58. | Support levels: 85.00, 83.00, 81.00, 79.24.

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