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Brent Crude Oil Restores its Positions

1/3/2023 12:32 PM

Prices for Brent Crude Oil show mixed dynamics, holding near 85.40. The quotes showed moderate growth, returning to local highs from December 5, updated at the end of last month against the background of the weakening of the US currency, which is losing ground in anticipation of the easing of monetary policy by the US Federal Reserve.

At the moment, analysts do not exclude a reduction in the interest rate in the second half of 2023, if the economic situation contributes to this. Since March last year, the US financial regulator has corrected the value by 425 basis points, slowing noticeably at the December meeting. Against this background, the dollar managed to strengthen its position, adding about 8.0% on average and showing the best dynamics since 2015.

The US Department of Energy's Energy Information Administration (EIA) data on oil and petroleum products inventories released last week were generally positive: a slight increase in oil inventories by 0.718 million barrels and distillates by 0.282 million barrels was offset by a decrease in gasoline inventories by 3.105 million barrels at once. However, a more significant increase in energy prices is still hindered by investor fears related to an increase in the incidence of coronavirus in China, which, in turn, may lead to a decrease in demand for "black gold".

In the near future, analysts expect the publication of a block of macroeconomic statistics from the US. On Wednesday, the December index of non-manufacturing supply managers from the Institute of Supply Management (ISM) will be presented, which reflects the state of business activity in the services sector (it is predicted to decrease from 49.0 points to 48.5 points), and minutes of the December meeting of the US Federal Reserve will be published as well. In addition, investors will pay attention to data from the American Petroleum Institute (API) on the dynamics of stocks for the week of December 30. The previous report showed a decrease of 1.3 million barrels.

On the daily chart, Bollinger Bands show a moderate increase. The price range expands slightly from above, freeing a path to new local highs for the "bulls". MACD is growing, maintaining a stable buy signal and being located above the signal line. The indicator is also trying to consolidate above the zero level. In turn, Stochastic, having reacted to the emergence of "bullish" dynamics at the beginning of the week, again reversed in the direction of growth, still being located near its highs.

Resistance levels: 86.00, 87.33, 89.20, 91.00. | Support levels: 85.15, 83.89, 82.27, 81.00.

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