Brent: negative dynamics prevail
06/02/2020
As a result of the sharp increase in tension in the Middle East after the assassination of Iranian General Suleymani as a result of a U.S. airstrike at a Baghdad airport, the price of Brent crude rose sharply earlier last month, reaching $ 71.95 per barrel.
In the future, in the course of reducing the degree of tension in the Middle East, the price also began to decline sharply. The outbreak of coronavirus in China has become a strong negative driver for quotations of oil and other commodities.
The price of Brent crude oil broke through a key support level of 63.60 (EMA200 on the daily chart) and an important support level of 63.90 (Fibonacci level 38.2% of the downward correction in the wave of rising prices from a level near the level of 27.10 to the highs of October 2018 near the mark of 86.60 dollars per barrel) and continued to decline.
Investor sentiment improved slightly on Wednesday after media reports that a university in China had found a method for treating coronavirus, which was also reflected in quotes for oil and other commodities. The meeting of OPEC and its allies also supported prices. Leading oil producers may decide to further reduce their production to offset the decline in demand caused by the coronavirus.
Nevertheless, the Energy Information Administration (EIA) of the US Department of Energy announced on Wednesday an increase in oil reserves by 3.355 million barrels last week, higher than the forecast of +3.0 million barrels. U.S. oil production is still near record highs of 13,000 million barrels per day.
At the beginning of today's European session, Brent crude oil declines again after rising on Wednesday and is trading near 56.00. So far, a strong negative impulse prevails. Long positions are premature so far.
The slowdown in the growth of the Chinese economy, the second largest in the world, due to the threat of a large-scale epidemic of the virus and a possible decrease in oil demand from China will still negatively affect the prices of commodities, including oil.
Support Levels: 54.23, 50.00
Resistance Levels: 56.90, 58.15, 59.20, 60.40, 62.00, 63.60, 63.90, 66.00, 67.50, 69.70, 71.95, 72.60
Trading Recommendations
Sell by market. Stop-Loss 57.10. Take-Profit 55.00, 54.00, 53.00, 50.00
Buy Stop 57.10. Stop-Loss 54.20. Take-Profit 58.15, 59.20, 60.40, 62.00, 63.60, 63.90
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