Yesterday oil stopped its local rising trend. All the current positive drivers for the oil market are already overtaken. New inputs are needed to continue growing. Otherwise, oil will continue its corrective downward movement.
Rising reserves continue to put pressure on oil.
Crude oil reserves in the U.S. are rising for the seventh week in a row. They have now reached a 20-month high. According to a report from the Energy Information Administration (EIA), reserves rose by 2.423 million barrels in the last week of January. Industry analysts had forecast a 2.457 million-barrel increase in reserves last week, in comparison with a 4.14 million-barrel increase as of January 27.
According to data from the EIA, over the past seven weeks, total crude oil reserves were almost 37 million barrels. Thus, the current level of reserves is the highest since June 2021.
The demand for oil in India is beginning to disappear. This developing market is becoming more and more important in the world oil market every year.
In January, fuel demand in India declined after reaching a nine-month high in December. The reason was a decrease in mobility of population caused by cold weather in some parts of the country.
Fuel consumption was about 4.6% lower than in the previous month. On Wednesday, data from the Petroleum Planning and Analysis Department (PPAC) of the Indian Ministry of Petroleum showed that consumption in January was 18.7 million tons. According to PPAC, diesel sales fell by 7.6% to 7.18 million tons in January, compared to the previous month. Gasoline sales fell by 5.3% to 2.82 million tons.
According to the technical analysis, oil is forming flat movement on the daily timeframe. On the hourly timeframe, the local rising trend has been broken. It opens new targets for a corrective movement. Yesterday the 0.5 level of Fibonacci was reached on the entire growth wave, where the rebound occurred.
On the background of weak fundamentals probably there will be a return to this level and the testing of the next 0.618 level. The downside target is set at $82. Stop-loss can be set at the renewal of the local highs and at the breakdown of the support level near the price of $85.7.
Decline of Brent crude oil:
Take profit – $82.0
Stop-loss – $85.7
This content is for informational purposes only and is not intended to be investing advice.