Oil has found a support level and is ready to rise

28 April 2023 232
Oil has found a support level and is ready to rise

The price of oil finally found its support around $77-78 per barrel. The decrease was caused by weak economic data in the U.S. and the monetary policy’s direction, which wasn’t identified by Fed and other central banks. Now the world market’s sentiment improves, and this gives oil quotations the possibility to grow. 

This year, OPEC additionally cut production to stabilize the oil market and not to push the oil price above $100, as some analysts have said. The world economy is sinking into recession, and the alliance reacted in advance by reducing output in the amount of expected weakening of demand.

Russia's Deputy Prime Minister Alexander Novak believes that another production cut won't happen soon, as the current decision to change oil production won’t come into force until May. OPEC+ doesn’t expect a shortage in the global oil market after a decrease in production. The absence of new cuts means the alliance sees no additional threats to oil demand. This is a positive moment for the oil price.

According to Secretary General of OPEC Haitham al-Gais, the International Energy Agency (IEA) should be more cautious about calling for cuts in the oil sector. According to al-Gais, oil prices aren’t technically related to inflation. He added that the majority of forecasts call for more of this valuable commodity.

Reducing production as part of the transition to green energy is one of the bullish factors for the long-term rise in oil prices.

As per technical analysis, oil has found support at the boundary of the medium-term downtrend. Also, the last Fibonacci 0.618 level is close throughout the whole growth wave from the lows. 0.382 may be the bounce target now. We are interested in the maximum in the body of the last bearish candle, it is just below the Fibonacci level. Thus, $80.6 will be the growth target. A stop-loss will be set when the local minimum is updated to $77.3.

Increase in Brent oil:

Take profit — 80.6

Stop-loss — 77.3

This content is for informational purposes only and is not intended to be investing advice.

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