Oil seeks to renew local highs again

04 August 2023 204
Oil seeks to renew local highs again

Oil is actively recovering from losses caused by the downgrade of the U.S. credit rating. The main line of the uptrend turned out to be unapproachable. Now the bulls are once again imposing their rules.

There is an important fundamental factor for this. It's the extension of the production cut by Russia and Saudi Arabia.

The statement of OPEC leaders was made a day before the meeting of the organization's members.

The OPEC+ Ministerial Monitoring Committee is not planning to adjust the overall oil production policy at the meeting on Friday, sources said. However, Saudi Arabia's pledge, as well as the announcement that Russia will cut production by 300,000 bpd in September, have heightened supply concerns and supported prices.


Oil consumption in the east continues to increase.

Oil imports by Asian countries rose to a record high in July. The region's two biggest consumers, China and India, continued to buy large volumes of discounted Russian oil last month. According to Refinitiv, Asia received an average of 27.92 million bpd in July. That surpassed May and June's record highs of 27.35 million bpd and 27.53 million bpd, respectively.

Recent estimates of U.S. crude oil production are also fuelling the commodity's upward momentum.

By the end of this year, U.S. oil production is expected to decline after reaching record highs. This is due to a decrease in the number of active drilling rigs over the past three months.

In August, shale oil production may decline due to production cuts in the Permian Basin. This could lead to a global shortage of crude by the end of the year.

The number of active oil rigs in the U.S. is declining at a rate not seen since the start of the pandemic. Many smaller companies are being forced to cut costs due to falling energy prices.


According to technical analysis, oil prices were able to maintain an uptrend. A decline scenario was not confirmed. Now there are new growth opportunities for oil.

The level of $86.6 will be the upside target. It acts as the upper boundary of the uptrend and the resistance level since the end of last year. Stop-loss could be placed upon breakdown of the trend, which corresponds to the price of $84.2.

Growth in the price of Brent crude oil:

Take profit – 86,6

Stop-loss – 84,2

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

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