Oil price resumes the rise

21 July 2023 224
Oil price resumes the rise

Oil prices started to rise again after a technical correction movement. The upper limit of the rectangle, which was relevant in May-June, and the 0.382 Fibonacci level from the whole growth wave acted as support for the quotes.

The latest fundamental data are also stimulating buying activity in the oil market.

According to the Short-Term Energy Outlook of the U.S. Energy Information Administration (EIA), the oil price will rise in the second half of this year and over the next one due to declining inventories. Reserves are expected to drop by an average of 0.4 million barrels per day between July 2023 and the end of 2024.

Due to production cuts, total OPEC output will remain below a five-year average before the pandemic (2015-2019).

Sales of crude oil from the U.S. Strategic Petroleum Reserve (SPR) closed in the last week of June. This fact contributed to the tightening of the global commodity market. Its further replenishment will depend on the country's refining volumes and the level of imports.

China's demand is keeping up as well, despite a reported slowdown in the country's economic activity.

The country is importing oil at almost record levels, while its domestic production is also rising. In June, the country's oil shipments jumped 45.3% year-on-year. This is the second highest monthly level on record.

The growth of imports is caused by the activity of oil refineries, which are building up inventories despite weak domestic demand. The volume of oil purchases in China amounted to 12.67 million barrels per day in June.

According to the technical analysis, the oil price has moved to a new growth wave. The medium-term uptrend was maintained. The reversal occurred just from it.

The nearest growth target will be the level of $82.0. The 200-day moving average will act as resistance there. A Stop-loss will be set at breaking through the lower limit of the uptrend at the level of $79.3. There is also the 0.236 Fibonacci level, breaking through which will open new downside targets for oil.

Brent oil prices are likely to rise:

Take profit – 82.0

Stop-loss – 79.3

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

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