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The Oil Market is in a State of Uncertainty
12/21/2022 2:01 PMLast week, WTI Crude Oil quotes rose to the middle line of Bollinger bands, but they still cannot break through above it and are traded around 77.00.
Several opposing factors influence the energy market: investors' hopes for an increase in fuel consumption in China and a recovery in its economy next year, as predicted by OPEC and the International Energy Agency (IEA), contribute to the increase in the asset. Also, it is expected that official Moscow will legally prohibit oil sales to countries that support introducing a ceiling price level for Russian oil, leading to its shortage, primarily in the EU countries. To get out of this situation, Germany expected to use supplies from Kazakhstan. However, according to the calculations of PJSC Transneft, it is technically impossible to provide a sufficient volume of transportation. Finally, the start of oil purchases for the state reserve, announced by the US administration, supports the trading instrument: the process promises to be lengthy, as 180.0M barrels released to the market this year to stabilize prices will have to be compensated.
A significant strengthening of quotations and the formation of a medium-term uptrend are hampered by the continuing risks of a global recession, reinforced by the tightening of monetary policy by the world's leading regulators. Also, several experts believe that the easing of coronavirus restrictions by the Chinese authorities may have the opposite effect, and an increase in the incidence in the country may lead to the re-imposition of quarantine measures or cause the emergence of a new strain of COVID-19 and another wave of the pandemic around the world. The American Petroleum Institute (API) data on oil reserves published yesterday did not provide enough momentum for the price: a decrease in oil reserves by 3.069M barrels was offset by an increase in gasoline volumes by 4.5M barrels and an increase in distillate reserves by 0.828M barrels.
The trading instrument is near the middle line of Bollinger bands at 76.30. To resume growth, the price needs to break the zone 76.30–78.12, and then it will be able to reach the area of 81.25 (Murrey levels [2/8]) and 87.50 (Murrey levels [4/8], Fibonacci correction 61.8%). The key "bearish" level is 71.68 (Murrey levels [–1/8]), a breakdown of which will give the prospect of further decline to 68.75 (Murrey levels [–2/8]) and 64.60 (the area of November lows last year).
Technical indicators do not give a single signal: Bollinger bands are directed downwards, but Stochastic reverses upwards, and the MACD histogram decreases in the negative zone.
Resistance levels: 78.12, 81.25, 87.50. | Support levels: 71.88, 68.75, 64.60.