Oil price has reached its downward target. The negative background of the last days in the form of high inflation, raising key rates and tightening of monetary policy by the central banks has had an effect on the prices.
Positive data for oil was released last night. Oil stocks are declining. Yesterday crude oil prices dropped so sharply that the market ignored the released statistics.
The Energy Information Administration (EIA) reported a 3.8 million-barrel decline in U.S. oil inventories last week, contrary to forecasts of an increase. Industry analysts had expected inventories to rise by 1.873 million barrels.
In the week ended June 9, crude oil inventories rose by 7.919 million barrels. However, it should be clarified that 1.7 million barrels were released from the U.S. Strategic Petroleum Reserve. Without them, the inventories would rise by 6.2 million.
A future reduction in oil production is also positive for the price. Reduced production means a future imbalance between supply and demand that will cause prices to rise.
The Federal Reserve Bank of Dallas surveyed energy executives. According to the results, the slowdown in oil field activity intensified in the second quarter, while oil and gas production declined.
The general Purchasing Managers Index fell to 0 from April to June from 2.1 in the previous quarter. The surveyed CEOs expect crude oil and gas prices to continue to rise through the end of this year. One way or another, this affects inflation, which the Fed is trying to reduce by raising interest rates.
According to the technical analysis, the price of oil has reached its first downward target. On improving fundamentals, a price reversal is possible. If you don’t take into account the candlesticks on the daily timeframe, where there was a drop and a subsequent buyback the next day, the price is at the lower boundary of the flat. It’s recommended to open long positions carefully with a small stop.
The growth target will be the Fibonacci level of 0.236 from the entire wave of decline in April, which corresponds to the price of $75.4. It’s recommended to put a stop-loss at the renewal of today's low, which corresponds to the round level of $73.0.
Growth in the Brent oil:
Take profit — 75.4
Stop-loss — 73.0