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Brent Crude Oil Probability of Decline Remains

11/10/2022 1:38 PM

After an unsuccessful attempt by the "bulls" to break out the resistance level of 99.10, the price of Brent Crude Oil began to decline and is trying to consolidate below the level of 94.00.

The driver of the downward trend was the news about the growth of crude oil reserves in the USA. According to the latest data from the Energy Information Administration of the US Department of Energy (EIA), the indicator was adjusted by 3.925M barrels, which significantly exceeded the analysts' forecast of 1.360M barrels and the previous value of -3.115M barrels. The increase in inventories indicates a reduction in the consumption of oil and petroleum products in the USA, which forces the market to lower prices.

The second correction factor is the strengthening of the USD. Bidders are preparing for today's publication of macroeconomic statistics on consumer price dynamics for October: the indicator is expected to slow down from 8.2% to 8.0% on an annual basis, and accelerate from 0.4% to 0.6% on a monthly basis. Statistics may have a noticeable impact on the position of the US Fed on the issue of further tightening of monetary policy, as record inflation remains one of the main drivers of an active interest rate increase. The expensive dollar, the growth of which is due to the US congressional elections and the granting of less power to the Republicans than previously predicted, makes oil less accessible to buyers in other currencies.

On the other hand, the EU embargo on Russian "black gold", which comes into force on December 5, will support oil prices. As a result, the supply of oil on the market will decrease, since Russia is a major supplier of energy resources.

Thus, in the mid-term, the growth of quotations will be limited by the resistance level of 99.10, and the fall in prices may stop at 89.00 and 83.50.

The long-term trend is downward. Buyers have not been able to break out the key resistance level in the area of 99.10, as a result of which there is a decline in quotations. Now market participants are trying to consolidate below the level of 94.00, if they succeed, then the sales targets will be 89.00 and 83.50.

The mid-term trend is upward. This week, the bidders achieved the main target for purchases in the area of 101.27–100.42. The zone has been held, as a result of which the price is declining and testing the key support of the trend 93.20–92.45, after overcoming which a new upward momentum is likely to begin with a target at 100.50. In case of a breakdown of the key support, it will be possible to consider sales with a target in the area of the lower target zone of 85.70–84.95.

Resistance levels: 99.10, 104.00, 110.00. | Support levels: 94.00, 89.00, 83.50.

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