On Friday, oil declined together with all commodities amid strong data on employment in the U.S. Yesterday and today there is an attempt to rebound.
The number of jobs in the U.S. non-agricultural sector for January increased more than expected to 517,000, the U.S. Labor Department reported on Friday. Unemployment fell to 3.4%, which is also better than expected, indicating strong demand in the labor market. This data increases fears about the Federal Reserve System continuing to raise and hold interest rates.
OPEC representatives made several statements over the weekend, and they are quite contradictory.
The collective decision to cut production in October was the right move, this opinion was expressed by OPEC Secretary General Haitham al-Gais on Monday. The OPEC+ alliance has always played an important role in regulating additional demand or excess supply. On Saturday, Saudi Arabia's energy minister said that he remained cautious about any increase in production.
OPEC's caution signals a potential weakness in oil.
According to OPEC member Kuwait, oil consumption in China, the world's largest importer, has been rising strongly since the end of the quarantine due to the coronavirus. There is an unmet demand that has accumulated during the pandemic. Now we are observing steady growth, not a temporary increase in demand. This view was stated by the chief executive officer of Kuwait Petroleum Corp. to Bloomberg TV channel in Bangalore, India.
Kuwait is confident in the sustainability of oil demand from China. In general, we agree with this opinion. Growing demand will have a positive effect on the price of oil in the medium term.
However, in the short term, the bearish factors may be stronger on the background of a strong labor market.
According to the technical analysis, the price of oil made an attempt to exit down from the global uptrend, it was unsuccessful. Locally, oil is in a downtrend, at its upper boundary. Probably, now there will be a bounce from this level, and in that case the downside target will be the lower boundary of the uptrend at $81.55.
A stop-loss can be set at $83.70, there is resistance on the hour timeframe.
Decline of Brent crude oil:
Take profit – $81.55
Stop-loss – $83.40
This content is for informational purposes only and is not intended to be investing advice.
