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Brent Crude Oil Market Update

3/23/2023 10:27 AM

During the Asian session, Brent Crude Oil shows ambiguous dynamics, holding near 75.70.

Over the past few days, quotes have been trying to recover amid the weakening of the US currency, which could not be supported by yesterday's publication of the US Federal Reserve's decision on monetary policy but by the close of trading on Wednesday, the dollar still managed to significantly win back its positions. Recall that the regulator, as expected, raised the interest rate by 25.0 basis points to 5.00%, the highest since 2007. In the accompanying statement, officials noted the expediency of some increase in the indicator in the future but did not specify its timing and size. The median forecast for the end of 2023 remained unchanged at 5.10%. At the end of 2024, the interest rate is expected to reach 4.3%, 0.2% higher than the previous forecast. This year investors do not expect any easing of the “hawkish” rhetoric, however, many analysts perceived the position of the head of the regulator, Jerome Powell, as “dovish”: the agency has to reckon with growing risks around the banking sector, which, however, according to the official remains “healthy enough”.

The growth of oil quotes was not hindered by the data on the dynamics of stocks of oil and petroleum products released on Wednesday from the Energy Information Administration of the US Department of Energy (EIA): for the week of March 17, the indicator increased by 1.1M barrels, while experts expected a correction of –1.448M barrels after rising 1.550M barrels earlier.

Yesterday, Russian Deputy Prime Minister Alexander Novak said that the reduction in oil production by 500.0K barrels per day in the country would be extended until the end of June this year. According to the official, the current negative situation in the hydrocarbon market is "man-made" and is the cause of high volatility and uncertainty. He added that the introduction of the price ceiling for Russian oil by Western countries, restrictions on the free movement of energy carriers, and an embargo on supplies lead to the destruction of the investment climate in cyclical industries and negatively affect consumers.

On the daily chart, Bollinger Bands are steadily declining: the price range is narrowing from below, reflecting the emergence of multidirectional trading dynamics in the short term. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line). Stochastic keeps a confident upward direction but is quickly approaching its highs, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 75.63, 77.00, 78.28, 80.00. | Support levels: 74.00, 73.00. 72.00, 71.00.

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