Crude Oil Updates by Solid ECN

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Crude Oil - The downtrend in the oil market continues​

All the factors operating on the oil market since the beginning of autumn have been preserved. First of all, this concerns the recent decision of OPEC+ to leave the current parameters for reducing the oil production by 2.0M barrels per day against the background of the expected supply surplus in 2022, which was indirectly confirmed by yesterday's statement by the Russian Deputy Prime Minister Alexander Novak, who announced an increase in oil production in the Russian Federation for eleven months by 2.2%, contrary to the negative forecasts of the International Energy Agency (IEA), which assumed a significant reduction in production in Russia by 10.87M barrels per day to 10.86M barrels per day. In turn, as part of the last meeting of the cartel on December 4, its participants decided to maintain current production plans, despite the introduction by Western countries of the ceiling price level for Russian energy resources at 60.0 dollars per barrel and the ongoing uncertainty in the market: demand may drop significantly from quarantine restrictions in China, and the proposal – if official Moscow decides to take retaliatory measures and stops supplying its resources to countries that supported the introduction of a new pricing mechanism.

On the daily chart, the trading instrument is moving around the year's low around 74, slightly correcting down, and the technical indicators confirm the high probability of further decline, strengthening the sell signal.

Resistance levels: 76.3, 81.5 | Support levels: 73, 65.41​

 

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Crude oil price begins bullish correction​

Crude oil price keeps rising to breach the bearish channel’s resistance by today’s open and settles above it, to start bullish correction for the entire decline that started from 92.9 areas, on its way to test 75.63 as a first positive station.

Therefore, we expect to witness more rise in the upcoming sessions, and breaching the mentioned level will extend the bullish wave to reach 78.93 areas, while breaking 73.65 represents negative factor that will stop the correctional bullish trend and press on the price to decline again.

The expected trading range for today is between 72.50 support and 76 resistance, and the expected trend for today is Bullish.​

 

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Crude oil price faces solid resistance​

Crude oil price’s rally stopped at 75.63, which formed solid resistance against the price, accompanied by witnessing overbought signals through stochastic that might press on the price to rebound bearishly, while the EMA50 supports the price positively.

Therefore, the contradiction between the technical factors makes us prefer to stay aside until we get clearer signal for the next trend, noting that breaching 75.63 will lead the price to achieve additional bullish correction that its next target reaches 78.93, while breaking 74.85 will put the price under negative pressure that its targets begin by testing 74.05 followed by 72.60 levels.

The expected trading range for today is between 73.80 support and 77.30 resistance.​

 

[SOLIDECN]

Crude Oil - Price growth potential remains​

Prices were supported by three main factors: a likely increase in oil demand in China after a significant easing of coronavirus restrictions, fears of a reduction in supply on the market due to the introduction by the G7 countries of the price limit for Russian supplies of "black gold" and the response of official Moscow, as well as a slowdown in the pace of tightening of the monetary policy of the US Fed on against the background of signs of slowing inflation. So, the US regulator raised the interest rate by 50 basis percentage points instead of 75 basis percentage points, as it was earlier, which put pressure on the US currency and raised the price above 83.0 dollars per barrel.

Technically, the price is close to the middle line of the Bollinger Bands 83.2, the breakout of which will give the prospect of further growth to the levels 87.5 (Murray level [4/8]) and 90 (Fibo retracement 38.2%, Murray level [5/8]). The key for the "bears" remains the level of 77 (Fibo retracement 50.0%, Murray level [1/8]), consolidation below which can cause a further decline to the area of 75 (Murray level [0/8]), 71.88 (Murray level [-1/8]), 68.75 (Murray level [-2/8]).

Resistance levels: 83.2, 87.5, 90 | Support levels: 77, 75, 71.88, 68.75​

 

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Crude Oil - The price is in a correction, a fall is possible.​

On the daily chart, a downward correction develops as the second wave of the higher level 2, within which the wave c of 2 forms. Now, the development of the fifth wave (v) of c has started, within which the wave iii of (v) has formed, and a local correction is ending as the wave iv of (v).

If the assumption is correct, the price of the asset will fall to the area of 72.50 – 62.55. In this scenario, critical stop loss level is 89.80.

 

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Crude Oil - the oil market is in a state of uncertainty​

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).

Resistance levels: 78.12, 81.25, 87.5 | Support levels: 71.88, 68.75, 64.6​

 

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Crude Oil - Oil reserves in the USA have sharply decreased again​

According to October statistics, the USA holds the lead with 11.971M barrels of oil, Saudi Arabia is in second place with 10.957M barrels, and Russia is in third place, which has significantly reduced production levels, which amounted to 10.66M barrels and is still higher than the 10.599M barrels recorded in August. During the period from January to October, energy production in the Russian Federation managed to increase by 2.4% from last year's figure to 443.2M barrels.

At the same time, oil reserves in the US strategic reserve continue to decline rapidly: last week the indicator adjusted by -3.6M barrels, amounting to 378.6M barrels, which is the lowest value since 1983. In addition, the US Department of Energy announced that in order to replenish the volumes put on the market, the purchase of energy will begin, and the first batch of 3.0M barrels will be delivered in February 2023.

On the daily chart of the asset, the price is trading within a descending corridor, being in the middle of the range. Technical indicators hold the sell signal, which has weakened somewhat recently

Support levels: 81.20, 75.80 | Resistance levels: 84.6, 89.4​

 

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Crude Oil Technical Analysis​

Crude oil price approached our waited target at 81.60 but it bounced downwards strongly to reach the key support 78.93, which urges caution from the upcoming trading, as continuing the negative pressure and breaking this level will stop the correctional bullish trend and push the price to suffer new losses on the intraday basis, while consolidating above it will lead the price to test 81.60 initially.

The expected trading range for today is between 78.60 support and 82.00 resistance.​

 

[Solid ECN]

Crude Oil Price Hits the Extended Target​

Crude oil price succeeded to achieve our main waited target at 73.30 and fluctuates near it, and we believe that the way is open to achieve more decline in the upcoming sessions, to head towards visiting the recently recorded low at 70.30 as a next main target. Therefore, the bearish trend scenario will remain suggested on the intraday and short term basis, supported by the negative pressure formed by the EMA50, noting that breaching 74.20 will push the price to achieve intraday gains that target testing 75.63 before any new attempt to decline.



The expected trading range for today is between 71.50 support and 75.00 resistance.

 

[SOLIDECN]

Crude Oil Price Attempts to Recover​

Crude oil price returns to rise and surpass the minor resistance 74.20, to hint new recovery attempts and head towards potential test to 75.63 as a first positive station, making the bullish trend expected for today, being aware that it is important to monitor the price when reaching the targeted level, as breaching it will lead the price to achieve more gains on the intraday and short term basis.



On the other hand, we should note that breaking 73.50 will stop the expected rise and press on the price to resume the bearish trend that its next main target located at 70.30. The expected trading range for today is between 73.00 support and 76.50 resistance.​

 

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Chart of the Day - Crude Oil​

Oil has launched a new week's trading on a positive note with Brent and WTI trading almost 3% higher on the day each. Chinese reopening is the main driver of the move. Starting from January 8, 2023 China no longer requires people arriving in the country to undergo a quarantine. Negative Covid test result is enough to enter China now. Moreover, Chinese authorities expect traffic during the upcoming Chinese New Year holiday to double from 2022 levels and amount to over 2 billion passengers. Those news boosted hopes for a pick-up in Chinese oil demand and it is pushing crude prices higher.



Taking a look at WTI (OIL.WTI) at H4 interval, we can see that the price is attempting to make a break above the resistance zone in the $76 per barrel area, marked with 23.6% retracement and previous price reactions. Break above would pave a way for a move towards $77.50 swing level and potentially to resistance zone in the $79 area, marked with 38.2% retracement.​

 

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Crude Oil Price Under the Negative Pressure​

Crude oil price tested 75.65 resistance line and bounced bearishly to settle at the key intraday support line that rises now to 74.30, to keep the price stuck between these levels, which keeps our neutrality valid until now, waiting to breach one of the mentioned levels to detect the next targets clearly.



Note that breaking the mentioned support will press on the price to resume the main bearish trend that its targets begin at 72.4 and extend to 70.3, while breaching the resistance will lead the price to achieve new gains that target 76.75 followed by 78.90 as next main stations. The expected trading range for today is between 72.5 support and 76 resistance.​

 

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Crude Oil - The price is in a correction, a fall is possible.​

If the assumption is correct, the price of the asset will fall to the area of 72.50 – 62.55. In this scenario, critical stop loss level is 100.28.

 

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Crude Oil - Growth is possible.​

If the assumption is correct, the asset will grow to the area of 93.25–100.50. In this scenario, critical stop loss level is 72.45.

 

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Crude Oil - OPEC expects growth in global oil production​

According to OPEC estimates, the trend for the recovery of quotations of "black gold" can be continued against the background of an increase in production. According to preliminary data, by the end of 2022, production will increase by 1.9M barrels per day by countries outside the cartel, and the forecast for 2023 suggests that the indicator will add another 1.5M barrels per day, reaching 67.2M barrels. It is expected that the USA, Canada and Brazil will remain the leaders in the production of "black gold", while in Norway and Thailand it will decrease slightly.

According to Bloomberg, despite the restrictions, Russian oil supplies by sea last week reached a maximum since April 2022 of 3.8M barrels per day. China, India and Turkey stand out among the main destinations, while Bulgaria remains the only port of shipment to the EU.

On the daily chart, the price is trading in a narrow sideways range, moving away from the lows of the year at the level of 70.5. The technical indicators confirm the high probability of continued corrective growth, strengthening the buy signal.

Support levels: 78.44, 70.5 | Resistance levels: 83.28, 92.2​

 

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Crude Oil - Saudi authorities have announced their readiness to trade not only in US dollars

Quotes are gradually recovering against the backdrop of fundamental news: investors are reacting to the recent statement by the Minister of Finance of Saudi Arabia, Mohammed Al-Jadaan, made by him during his speech at the World Economic Forum (WEF) in Davos. The official said that for the first time in 48 years, his country is ready to consider proposals for international trade in currencies other than the US dollar. This statement supported the recent global de-dollarization trend, a support factor for the black gold market, creating an opportunity for more independent pricing to emerge.

Another factor of local support for oil prices was the statement by US Treasury Secretary Janet Yellen, who noted that the introduction of a price limit for petroleum products from the Russian Federation is a much more complicated process than the previously introduced limit on the cost of raw materials since there are a lot of their types, and each has a dynamic price, which makes it difficult to establish specific values, and it will take considerable time to develop the final rules. The new restrictions could be formalized as early as February.

On the daily chart, the trading instrument is moving within a downward corridor, approaching its resistance line at 87.30, and the technical indicators reinforce the buy signal.

Resistance levels: 89.3, 97.7 | Support levels: 84.8, 76.7​

 

[SOLIDECN]

Crude Oil Technical Analysis​

Crude oil price shows more bearish bias to approach our main waited target at 75.65, and we expect to continue the decline to surpass this level and suffer more losses on the intraday and short term basis, to keep the negative scenario dominant in the upcoming sessions unless the price rallied to breach 78.95 and hold above it.

The expected trading range for today is between 75.65 support and 79 resistance.​

 

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Crude Oil - OPEC+ sticks to production cut plans​

The oil market has stabilized, and the meeting of OPEC+ energy ministers held yesterday in the format of a videoconference met traders' expectations: officials recommended cartel members maintain the earlier decisions to reduce production by 2.0M barrels per day. According to most experts, this course of action is fully in line with the current situation and contributes to the preservation of oil quotes within 80 – 90 dollars per barrel.

Data on stocks of raw materials in vaults in the US for the fifth week in a row signal an oversupply. So, yesterday, the American Petroleum Institute (API) reported an increase in the weekly rate of 6.330M barrels after an increase of 3.378M a week earlier, and a report by the Energy Information Administration of the US Department of Energy (EIA) reflected an increase in the value of 4.140M barrels after an increase of 0.533M earlier. The statistics are trying to provoke pressure on the quotes of the asset, but so far, there has been no reaction from investors to the published data. Also, as the International Energy Agency (IEA) reported in its recent report, attempts by the G7 countries to impose a price ceiling on Russian oil and thereby limit its supply on the market will not lead to serious consequences. According to the organization's director, Fatih Birol, if difficulties arise, they will not last longer than the first quarter of 2023.

On the daily chart, the trading instrument is moving within the local ascending corridor, coming close to the support line at 82, and the technical indicators increase the probability of growth.

Resistance levels: 85.5, 92 | Support levels: 80.64, 75.5​

 

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Crude Oil Price Presses on the Support​

Crude oil price attempts to break 75.65 level, to hint heading to achieve more decline in the upcoming sessions, organized inside the bearish channel that appears on the chart, to target 74.10 areas initially.

Therefore, the bearish bias will be suggested for today, noting that breaching 76.2 will stop the expected decline and lead the price to recover and attempt to build bullish wave on the intraday basis. The expected trading range for today is between 73.8 support and 77 resistance.​