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Brent Crude Oil Medium-term Trend in the Asset is Upwards

1/26/2023 2:00 PM

Brent Crude Oil is holding at 86.70 after yesterday's minor fluctuations.

The market continues to evaluate statistics on US oil reserves: for oil, the indicator has increased for the fifth week in a row, adding 533.0K barrels last week, which, however, is inferior to analysts' preliminary estimates of 0.971M barrels and the previous value of 8.408M barrels. At the same time, gasoline inventories rose by 1.76M barrels and distillates – adjusted by –507.0K barrels. The current trend reflects lower oil demand, also to broader market fears about a slowdown in the global economy this year amid the ongoing tense geopolitical situation associated with the escalation of the military conflict on the territory of Ukraine. In turn, Europe is trying to replace Russian oil with supplies from other countries, and China has expanded quotas for local refineries to import crude oil in the amount of 112.0M tons, which may contribute to higher prices.

Against this backdrop, OPEC+ is likely to leave the current level of production with a reduction of 2.0M barrels per day unchanged at the meeting next week, and due to the lack of significant news before the US Federal Reserve meeting on February 1, the trading instrument will be traded amid low volatility in the range of 89.00–76.00.

The long-term trend remains downward. This week, market participants held the resistance level of 89.00, and it is worth considering new short positions from it with a long-term target of 76.00, and in case of its breakout, the trend is expected to change to an upward one, and quotes will rise to the November high in the resistance area of 99.50.

The medium-term trend is upward. After the breakout of the target zone 84.76–84.09, the next buy target is zone 2 (91.46–90.79), and the key trend support is shifting to 82.34–81.67, and in case of a correction to this area, it will be possible to consider long positions with the target at the high of the current week of 88.90.

Resistance levels: 89.00, 99.50. | Support levels: 76.00, 69.70.

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