Yesterday, a forecast for the currency pair USD/CAD was published, where the main emphasis was on the dynamics of oil prices. Yesterday and today, according to the technical analysis, oil has an intention to reverse after a brief correction.
China’s economic activity is in the spotlight. The weakness of raw materials assets in recent days can be linked to the outbreak of COVID in China. The conditions in the country complicated by disease negatively affect the recovery of demand for fuel. Since China is one of the largest importers of oil in the world, this recovery is necessary. However, these problems are temporary, and according to Chinese forecasts the peak of diseases will be in January 2023, that is, the consequences of the outbreak will not last long.
This China’s forecast is confirmed by recent news reports. Economic activity is recovering in several cities, where the number of COVID cases has probably already peaked, although many parts of the country are still struggling with fast disease spread. The mobility of the population is still well below the levels reached a few months ago. Subway ridership in Beijing, Chongqing, Chengdu and Wuhan rose by about 40% to 100% in the week to Wednesday. It is a sign that residents of these areas are getting back to work.
The second bullish factor for oil remains the oil cap.
The Russian Federation's response to the G7 price cap on Russian oil matches the promises previously voiced by state representatives, and had no significant impact on global fuel supplies. However, Russia leaves open for a more decisive move to the EU-imposed price threshold for raw materials.
According to the technical analysis, oil bounced from the lower boundary of its uptrend. Growth to the upper boundary is likely to be, to the level of $88 per barrel. Also, this level coincides with the 0.236 Fibonacci from the whole wave of oil correction since the beginning of 2022. A stop loss can be put at the current trend downward exit and the updated yesterday candle’s price lows. This is the level of $81.6 per barrel.
Brent crude oil is likely to grow:
Take profit – $88
Stop-loss – $81,6
This content is for informational purposes only and is not intended to be investing advice.