Brent oil prices are now in a strong multi-month support zone in the range of 70.0–78.0 dollars per barrel. As it was mentioned earlier, prices will sooner or later break through the lower boundary of this zone, and at least make a deep spike to the area of $60 per barrel, and at most it will consolidate there, and then go even lower.
Today, weekly oil stockpiles data from the American Petroleum Institute (API) was released and showed a strong decline from 4.753 million barrels to -5.935 million.
If this inventory shortage is confirmed later today by government reporting data, Brent prices are likely to get temporary support.
In case oil inventories show an increase relative to the previous value, it may give an impetus to a decline in Brent quotations to the level of $71 per barrel.
An additional factor that can confirm the fall in demand for oil is the volume of orders for durable goods. Decrease in this indicator reduces the demand of companies for raw materials and has a negative impact on oil quotations. Today, the market expects a decline in the volume of orders from the previous estimate of 0.0% to -0.8%. If the actual value is even lower than forecast, it will also put downward pressure on prices.
One should also pay attention to today's release of US GDP data for the third quarter. A value above the forecasted expectation will indicate a relatively overheated economy, which will restrain the Fed in easing policy, and this, in turn, will also have an impact on the decline in manufacturing activity, future industrial production and reduced demand for raw materials.
The overall recommendation is to sell Brent oil, provided US crude inventories are above 0.500 million barrels.
Profits should be taken at the level of 71.00. A Stop loss could be set at the level of 73.00.
The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
