Oil back to the December highs
Oil prices recovered to the levels of December 7 last year. A barrel of North sea Brent crude oil traded on Monday, January 21, 62,77 USD and remains committed to increase.
In the last week the market received a lot of mixed signals, but chose those which “bulls” – the price of raw materials went up. So, statistics from the US Department of energy, published earlier, showed that oil stocks fell slightly, but significantly increased the reserves and gasoline and distillates. While reducing the activity level of refinery production of “black gold” rose to 11.9 million barrels per day (+200 thousand barrels per week). This means that relatively high commodity prices (compared with the December notes) “comfortable” for shale companies.
At the same time, a report from Baker Hughes (watching the number of drilling rigs in the U.S. and Canada) came out last Friday, not the most confident. The number of oil rigs in a week in the U.S. fell by 21 PCs and amounted to 852 units, the number of gas declined by 4 PCs Total quantities of drilling in the US decreased by 25 units to the level of 1 050 PCs.
Why the decrease in the number of towers? Most likely, manufacturers doubt that the increase in the price of oil in the last 5 weeks is just a reversal of the trend, not long lasting correction. This moment forced to be patient and to continue monitoring the situation on the market.
The behavior of the U.S. dollar, which last week strengthened on world currency markets, while not particularly worried oil investors.
For a General understanding in the market of Brent oil it is necessary to consider the daily timeframe tool. See that candle on 26 Dec 2018, forming the pattern “Absorption”, was the start of the upward correction. The approaching rollback warned convergence. The quotes are approaching the 38.2% on the Fibonacci scale (of 64.30) and can continue growth to the level of 50.0% (68,55).
On 4-hour chart we note the development of a stable trend of growth. But it is worth noting that after the breakout of recent high, the market may go in a pullback to the support level at 61,50. After a rebound we can expect the formation of growth momentum to the level 65,60.