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Brent Crude Oil Upward Dynamics

2/16/2023 2:19 PM

Brent Crude Oil quotes show an upward trend during morning trading, despite the fact that the actual data on the reserves of "black gold" in the USA exceeded the analysts' forecast by 14 times.

On Wednesday, data on oil reserves from the Energy Information Administration of the US Department of Energy (EIA) was published. Thus, the indicator amounted to 16.283M barrels, which turned out to be higher than the analysts' forecast of 1.166M barrels and the previous value of 2.423M barrels, but there was no global decline in Brent Crude Oil quotes, which allows us to draw two conclusions: firstly, investors have already laid a possible correction in prices, and secondly, the impact on them continues to provide a fundamental background.

The most important factor pushing the quotes up is the reduction in crude oil production excluding gas condensate in Russia by 500.0K barrels per day or about 5.0% of total production, which became a reaction to Western sanctions related to exports due to the escalation of the military conflict between Russia and Ukraine. Nevertheless, according to Deputy Prime Minister Alexander Novak, this will contribute to the restoration of market relations in energy trade. In addition, investors assume that after the lifting of quarantine restrictions in China, the demand for "black gold" will increase, and the supply from Russia and OPEC will be the same or less, which is a "bullish" factor for the price. Accordingly, in the mid-term, the instrument may retest the 89.00 level.

The long-term trend remains descending. The key resistance of the trend is located in the area of the 89.00 level, if it is held by sellers, then there will be a decline in quotations to the area of 79.70, 77.70 and 75.70. Having overcome this wide support area, the price will be able to continue the downward trend with a target at 69.70. If the resistance level of 89.00 is broken out, then the trend will change to an upward one, and in this case it will be possible to consider purchases with a target at 99.50.

The mid-term trend is downward. Today, buyers are trying to break the key resistance of the trend 86.33–85.67. If they succeed, the price will reverse upwards with a target of rising to the target zone of 92.93–92.27. If the 86.33–85.67 area is held, then the mid-term downtrend will continue with the first target at last week's low of 79.20.

Resistance levels: 89.00, 99.50. | Support levels: 79.70, 77.70, 75.70, 69.70.

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