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Brent Crude Oil Positive Momentum may not Last Long

1/10/2023 1:30 PM

Brent Crude Oil started the week up to 81.40 after the restrictions on the Chinese economy were lifted.

Over the weekend, the country's external borders were reopened to tourists. Also, experts predict a significant increase in internal movements during the traditional celebration of the New Year according to the lunar calendar against the backdrop of easing quarantine rules, which, in turn, should contribute to an increase in demand and consumption of hydrocarbons from the main world oil importer.

Today, the positive dynamics have slowed down, and quotes have even lost some of the won positions due to the negative impact of monetary factors. Investors are trying to analyze the US Federal Reserve's further steps in monetary policy, which will mainly depend on the December inflation data coming out on Thursday: if the indicator strengthens, the regulator may go for a new increase in interest rates. The "hawkish" rhetoric will lead to a cooling of the country's economy and will harm fuel consumption.

Also, the asset was negatively affected by the temporary refusal of the US Department of Energy to buy 3.0M barrels of oil to replenish government reserves. The first oil deliveries were supposed to be made in February, but now they will not take place, as the government considers current prices for raw materials unprofitable for taxpayers.

During the day, weekly data on US energy reserves from the American Petroleum Institute (API) will be released. The last time the indicator rose by 3.298M barrels, the continuation of this trend may put additional pressure on quotes.

The long-term downtrend in the market continues. The key "bullish" level is 81.25 (Murrey level [2/8], the middle line of Bollinger bands), consolidation above which will give the prospect of developing upward dynamics to 84.38 (Murrey level [3/8]) and 87.50 (Murrey level [4 /8]), and if 77.25 is broken down (Fibonacci correction 50.0%), the decline may resume to 75.00 (Murrey level [0/8]), 71.88 (Murrey level [–1/8]).

Technical indicators do not give a single signal: Bollinger bands are horizontal, the MACD histogram is stable in the negative zone, but Stochastic is preparing to leave the oversold zone.

Resistance levels: 81.25, 84.38, 87.50. | Support levels: 77.25, 75.00, 71.88.

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