The price of oil is not ready for growth and could fall below $ 50
Brent crude on Friday updated the lows since September 3, 2017 and touch the bottom level 52,79 USD. At the beginning of the final week of the December raw materials recovered somewhat in value, the main trading session takes place with an increase of about 54,16 USD/barrel Brent. However, it is clear that the market is not ready for a full rebound in oil prices.
Statistics Agency Friday from Baker Hughes showed that the number of drilling rigs in the US increased by 9 units, to the level of 1089 units is and oil and gas rigs together. Separately, the number of oil rigs increased by 10 units after weak last week, the number of gas decreased by 1 item statistics Released – quite a “bear” market.
However, the sell-off in oil began early, even before the fed announced its intention to preserve the approach to the formation of monetary policy unchanged with minor amendments in 2019 will be two rate hikes together the previously announced three. Otherwise, the fed is left to stand his ground even with the strongest pressure from the White house and economists.
Investors can understand. The continuation of growth of cost of borrowing can be challenging for a business that is already tired of competing for market niche, and human resources. The reduction of business activity will affect the indicators of production, and this will deprive part of the GDP dynamics. In addition, the drawdown in the production drags a decline in interest in energy. This puts pressure on commodities.
Seeing the dynamics of prices for Brent crude in recent months, it is necessary to assess the potential for further medium-term decline and the overall current situation. On the daily chart you can see that quotes for after a short test overcame projection line support. Thus, the downward dynamics of the adjusted previous long-term trend growth of 50.0% according to Fibonacci scale, and rushes to the next important levels are 61.8% (50,05) and 76,0% (41,48). It is worth noting that mark 41,48 is on the line of projection of the second support channel. We can assume that after reaching this level followed by a pullback to the resistance level 59,90.