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Brent Crude Oil Market Update

12/23/2022 11:09 AM

Brent crude oil quotes show flat dynamics, holding slightly above 78.00 and renewing local highs from December 5.

The trading instrument is supported by positive expectations for the Chinese economy, easing quarantine restrictions, which, according to analysts, will help avoid an imbalance in hydrocarbon demand due to industrial enterprises' long-term downtime. The quotes are positively affected by macroeconomic statistics on the dynamics of commercial energy stocks in warehouses in the United States: for the week of December 16, the figure fell by 5.9M barrels, while experts expected a decrease of only 1.7M barrels, although earlier it had risen sharply by 10.231M barrels. The volume of strategic reserves reached 378.6M barrels, which was the lowest level since 1983.

On Friday, investors will focus on a block of US macroeconomic data, particularly durable goods orders for November, as well as statistics on new home sales, as the national real estate market has been weakening lately. A report from Baker Hughes on active oil platforms will be published today.

Meanwhile, Deputy Prime Minister of the Russian Federation Alexander Novak said that official Moscow plans to ban the supply of oil and oil products to countries requiring compliance with the maximum price level of 60.0 dollars per barrel introduced by the EU authorities, Australia, and G7 on December 5. At the beginning of next year, oil production in Russia may be reduced by 500.0K–700.0K barrels per day. However, according to the official, by the end of 2022, this figure will increase by 2.0% to 535.0M tons and oil refining – by 5.0%. It is noted that Russian President Vladimir Putin will sign a corresponding decree on retaliatory measures to introduce the pricing mechanism at the beginning of next week.

On the daily chart, Bollinger bands are moving flat: the price range is expanding from above, letting the "bulls" renew local highs. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line). Stochastic shows similar dynamics, but the indicator line is close to its highs, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 78.00, 79.81, 81.00, 83.00. | Support levels: 77.00, 76.00, 74.00, 73.00.

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