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Brent Crude Oil Prices are Actively Declining

11/28/2022 11:00 PM

At the beginning of the week, Brent Crude Oil prices are actively declining, building on the "bearish" momentum formed at the end of last week, and are approaching 81.00, below which they last traded in January.

The situation in China exerts significant pressure on the instrument's position: last weekend, the authorities recorded 39.791K new cases of COVID-19, an absolute record since the start of the epidemic. Active demonstrations against the introduction of quarantine restrictions continue in Beijing, which also affect the work of industrial enterprises, reducing shifts or taking a break for several weeks. Quotations are supported by discussions on introducing the marginal cost of Russian oil in the EU: last week, officials failed to agree on specific restrictions, in connection with which it was decided to postpone the debate. Most countries of the union maintain a price threshold of 65.0–70.0 dollars, but considering that oil from the Russian Federation is already sold at a significant discount, analysts suggest that such restrictions are unlikely to noticeably affect the situation with the supply of the oil market.

Moderate support for quotes is also provided by reducing stocks of "black gold" in American warehouses. Last week, the Energy Information Administration of the US Department of Energy (EIA) reported a drop of 3.691M barrels in the figure after a decrease of 5.4M barrels in the previous period. Meanwhile, it became known that the Office of Foreign Assets Control (OFAC) issued a six-month extended license to the largest national energy company, allowing it to import oil or petroleum products produced in Venezuela, which will allow it to receive additional sources of oil against the backdrop of anti-Russian sanctions and stabilize the market by lowering prices. At the same time, the document still prohibits the payment of any tax duties or royalties to the Venezuelan government and the payment of any dividends to the state oil company PDVSA or any legal entity.

On the daily chart, Bollinger Bands are steadily declining: the price range is expanding from below, letting the "bears" renew record lows. The MACD indicator is decreasing, keeping a strong sell signal (the histogram is below the signal line). Stochastic demonstrates similar dynamics. However, it is near the level of "20", which indicates that the instrument may become oversold in the ultra-short term.

Resistance levels: 82.27, 83.89, 86.00, 87.00. | Support levels: 81.00, 80.00, 78.28, 77.00.

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