Numerous factors indicate the oil growth

The oil prices stabilized.

API reported that the reserves of crude oil in the US decreased by 3.1 million barrels. Economists expected the 167,000-barrel decrease. Last week, the reserves of crude oil increased by 7.8 million barrels.  

The periods of crude oil demand swings cause a significant lack of reserves. 

The United States Department of Energy stated that it started to purchase oil for Strategic Petroleum Reserve (SPR) after the sale of 180 million barrels earlier this year. The purchase will amount to nearly 3 million barrels, and the supply will be in February.

The amount of SPR decreased approximately by 380 million barrels — the lowest level since 1984. It raised the concern about the security of the county's energy supply. 

It is expected that the demand for oil in China will grow amid the refusal of the “zero-tolerance” policy concerning COVID-19. At the same time, the analysts are sure that the recovery of demand will require time. Energy Aspects Ltd. increased the forecast on the oil growth for the first quarter of 2023 by 260,000 b/d. According to analysts, the demand will grow in particular for gasoline and aviation fuel, because of the absence of travel control. 

There is some good news for the oil market that can’t be missed. Despite the problem with the removal of restrictions in China, the demand for energy products in the country grows. The United States Department of Energy was following the bearish strategy concerning oil and selling its reserves, now these sales ceased, and there is additional demand due to the replenishment of reserves. As for oil reserves in the US, they have been coming out worse than forecast for several weeks (except last week), and this is another positive factor for the oil market. 

API Crude Oil Reserves

Technically, the oil is currently on the flat and tries to break the downtrend. This can be a base for strategy. The downtrend will remain if the price goes below $78 per barrel, and here we will place the stop-loss. During the upward exit of the downtrend (this option is the most likely on a positive external background), you can set growth goals. The target of this movement is the upper limit of the emerging uptrend of $85.5 per barrel, which coincides with the price highs of 2021.

Growth of Brent oil:

Take profit – $85.5

Stop-loss – $78