Oil develops a global downtrend
Oil is a smooth correction after the sales of the last month and a half. The full restoration to speak in any case, sooner, but the investors gradually buy pretty depreciating asset.
On the one hand, now these purchases, in addition to attractive prices, based on the factor of the weak dollar. While the U.S. currency is under pressure, investors remain reasons for acquisitions. On the other, the fundamental backdrop still remains quite bearish, but at the first sign of strengthening of the entire oil grinbek positive can “come to naught”.
Statistics on stocks of oil and oil products in the USA 8 weeks showed growth, at the same time as the refinery utilization (90.1% of the latest figures) and production of “black gold” (11.7 million barrels per day – the historical record). Simultaneously there are reports of expanding production of raw materials in Russia, while Saudi Arabia alone trying to “balance” the market offers and is taking steps to decrease daily volumes of oil.
At the same time, global demand for oil is not growing at the pace that was expected, more – in the coming weeks are projected further slowdown. This factor can have a negative impact on the oil quotes.
It will be interesting to follow the development processes of OPEC+ new document regulating production inside the countries, joined to the earlier agreement. The old standards have been exhausted, a new “framework” yet, but to leave the market of raw materials without restrictions is impossible. It is believed that OPEC+ will deal with the elaboration of a new agreement in the near future, and by the end of the first quarter of 2019 it must be presented to the world.
Quotes of Brent crude oil continue to show the development of a long-term downtrend. Perhaps many are already tired of the monotonous decrease, but the signals for correction are almost there. Considering the technical picture of Brent on the 1 hour timeframe, we see that after the breakout of the support line of the corridor the previous quotes have not reached the target of the support line projection of the channel and form local short-term correctional trend.
The market has returned to the limits of the old corridor and is currently re-testing its support line, which could result in its breakdown and a decline to the target level 61,10. But it is also necessary to understand that testing support can result in rebound, which will continue with the correction and growth to the resistance line at the level of 70.00.