Oil tries to make another full reversal after retesting local lows. Concerns about weak global demand look unconvincing. Low consumption of raw materials in developed countries will be compensated by developing ones, led by China. Also, electricity demand will grow in many countries due to the hot summer weather. This will increase the consumption of oil and petrochemicals.
The latest report on low fuel inventories in the U.S. supports oil.
The level of gasoline and diesel in American storage facilities turned out to be the lowest for this time of year.
Total U.S. fuel inventories decreased by 521 million barrels since early July 2020. As of May 5, the country had about 1,597 million barrels of oil equivalent in its storage facilities. That figure is 15% below the seasonal average for the past ten years.
The wildfires in Canada continue to limit the country's oil production. Such events could be more frequent and affect the supply of crude, considering the hot world weather.
Companies in Alberta, Canada's largest mining province, have been forced to cut oil and gas production. Dry weather and erratic winds have increased the forest fire probability in the region.
Currently, Canadian companies have suspended fossil fuel production in Alberta. The cumulative reduction amounted to about 319,000 barrels of oil equivalent per day. Such a figure corresponds to 3.7% of the country's total production.
According to the technical analysis, oil is making its second attempt to reverse the trend on a daily timeframe. A double-bottom pattern has appeared on the chart, which may hint at further growth of the commodity.
The 0.5 Fibonacci level could be a growth target of the entire correction wave, and this corresponds to the price of $79.5. There is also the bottom line of the gap, which was formed due to the announcement of the additional reduction in the OPEC+ oil output in early April. The stop-loss is set when the gap goes below 0.236 Fibonacci, which corresponds to $75.0.
Increase in Brent:
Take profit — 79.5
Stop-loss — 75.0
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