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Possible Reduction in Oil Supply Contributes to Price Growth

11/2/2022 2:03 PM

The quotes of WTI Crude Oil are attempting to grow for the third week in a row, as fears of a reduction in supply on the market due to a decrease in OPEC+ oil production by 2.0M barrels per day and the entry into force of restrictions on the supply of Russian "black gold" to the EU prevail over expectations of a global recession.

Currently, two main factors provide short-term support for energy quotes: reports about the upcoming easing of quarantine measures in China and a significant reduction in the reserves of "black gold" in the USA. In the social networks, information began to spread that the Chinese authorities are working on the possibility and are studying ways to change coronavirus restrictions from March 2023, which, in turn, aroused the interest of investors expecting an additional increase in demand for oil from its leading world importer.

Meanwhile, the reserves of "black gold" in the USA are seriously declining, also confirming the continued high demand, despite significant economic pressure. According to the latest report of the American Petroleum Institute (API), the indicator immediately decreased by 6.530M barrels with an expected increase of 0.267M barrels.

In general, the growth potential of quotations remains, but during the day they may be subject to serious fluctuations against the background of the results of the US Fed meeting. Any hints from the US authorities about the impending slowdown or suspension of monetary policy tightening may lead to a weakening of the dollar, otherwise it will strengthen its position, creating pressure on oil quotes.  

Technically, the price is close to the level of 90.62 (Murray [5/8]), a breakout of which will give the prospect of further growth to 95.45 (Fibo retracement 50.0%), 100.00 (Murray [8/8]). The key for the "bears" is the 84.38 mark (Murray [3/8]), consolidation below it may lead to a decrease to the area of 78.12 (Murray [1/8]), 76.70 (the area of September lows).

Technical indicators do not give a single signal: the Bollinger Bands are horizontal, but the Stochastic is directed downwards, and the MACD histogram is at the zero line, its volumes are insignificant. 

Resistance levels: 90.62, 95.45, 100.00. | Support levels: 84.38, 78.12, 76.70.

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