Oil trades in flat days after Russia announced a 500,000 barrels per day production cut. The reaction of oil on this news from February 10 is marked on a chart. It is necessary to follow the direction of exit from this candle, then the further vector of oil movement will be determined.
The bearish factor for oil is the large inventories in the US. EIA inventories of oil and petrochemicals rose by 16.3 million barrels last week, and this is much higher than the forecasted value of 1.16 million barrels. U.S. crude oil inventories are now at their highest level since mid-2021 after rising for eight weeks in a row. The announcement of a further sale of barrels from the Strategic Petroleum Reserve, together with expectations of a subsequent hike in interest rates, also puts pressure on prices.
Currently, the impact of post-zero-COVID China's booming economy on commodities is a clear illustration of how market sentiment and actual business activity of participants don’t match.
The cost of commodities ranging from iron ore to crude oil and copper has surged since Beijing abandoned its zero-COVID policy. However, prices have significantly changed from this time. Moreover, Chinese imports of main commodities have yet to show any significant uptick, even though they remain at a quite high level.
The effect of the opening of China has already lost its strength. Now the markets will look at real economic data, so there may be unpleasant surprises ahead.
As mentioned above, oil is trading inside an hour candle that was formed on February 10. The range of price change for this candlestick is $84.07 — $86.71. Now we approach its upper boundary, so you can try to open a short position to return to the lower boundary of the candle.
The downside target can be placed near the lower boundary of the candlestick body at $84.20. The Fibonacci level of 0.382 is not far from this target, and it may support the quotes. A stop-loss can be placed near the high of the candle, which corresponds to $86.77.
Decrease in Brent oil:
Take profit — 84.20
Stop-loss — 86.77
This content is for informational purposes only and is not intended to be investing advice.