Jump to content

Crude Oil Forecast: Brent Crude Remains Under Pressure Despite Positive Open


MongiIG

Recommended Posts

BRENT CRUDE OIL (LCOC1) ANALYSIS

  • Markets await details around IEA stock release.
  • Yemen truce holds off supply concerns.
  • Shanghai lockdown stifles demand forecasts.

Crude Oil Forecast: Brent Crude Remains Under Pressure Despite Positive Open

CRUDE OIL FUNDAMENTAL BACKDROP

Brent crude remains above the psychological $100/barrel level with the aid of a slightly weaker U.S. dollar this morning. Last week Friday, the International Energy Agency (IEA) announced that its member states would contribute to another synchronized oil release to ease tight market conditions. This extended crude oil losses only a day after the U.S. declared its intentions to release 180MMbbls from its SPR.

Particulars of the IEA release are much anticipated by markets and could give bears additional impetus to weigh on crude prices. Markets have largely stayed indifferent to the IEA news until more clarity is provided. Relief from the supply side comes in the form of a truce between the UAE and the Houthi group to stop military activity on the Saudi-Yemen border.

Learn more about Crude Oil Trading Strategies and Tips in our newly revamped Commodities Module!

Demand side changes via lockdowns in China (most recently Shanghai) have also lowered oil forecasts as the nation continues to adopt a ‘zero tolerance’ policy.

TECHNICAL ANALYSIS

BRENT CRUDE (LCOc1)DAILY CHART

brent crude daily chart

Chart prepared by Warren Venketas, IG

Hesitancy after last weeks sharp drop is evident from the small candle prints including Friday’s doji. This is reinforced by the Relative Strength Index (RSI)hovering around the midpoint 50 mark that favours neither bullish nor bearish momentum. Recent price action resembles a descending wedge with the horizontal support (red) and downward sloping trending (black) making up the pattern. Traditionally, the descending triangle points to downside continuation with a preceding downtrend however, brent crude displays a preceding uptrend leading into the descending triangle. Regardless, a breakout below triangle support could spark a further move lower.

Key resistance levels:

  • $120.50
  • Triangle resistance (black)
  • $109.03/20-day EMA (purple)
  • 50-day EMA (blue)

Key support levels:

  • $100
  • 100-day EMA (yellow)

IG CLIENT SENTIMENT BEARISH

IGCS shows retail traders are marginally NET LONG on Crude Oil, with 55% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term downside bias.

 

Apr 4, 2022 |   Warren Venketas, Analyst. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,043
    • Total Posts
      95,436
    • Total Members
      43,659
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Lan
    Joined 01/10/23 05:13
  • Posts

    • Sorry, I didn't get it... What's Dual investment? 
    • The crypto market appears to be showing signs of recovery, with significant improvements in the Sharpe Ratios of Bitcoin, BGB, and Ethereum, according to an article published on Friday.  The Sharpe Ratio, a measure used to understand the return of an investment compared to its risk, has seen a notable increase for both cryptocurrencies. Bitcoin's Sharpe Ratio has risen from -2.4 to 0.68, while Ethereum and BGB have also experienced a similar uptrend. This change signifies higher returns at lower risk, which is expected to attract more investors to the crypto market. In addition to the improved Sharpe Ratios, increased network activity and trading volume as shown on CEXs like Bitget, Binance, and a few DEXs are suggesting a healthier market state. The current trading prices of Bitcoin, reflect this overall positive market sentiment. As of Friday, Bitcoin was trading at $27,069.73, BGB at $0.454 and Ethereum at $1,677.89. These developments are significant as they indicate reduced risk in the crypto market. The increase in the Sharpe Ratios for Bitcoin, BGB, and Ethereum suggests that these cryptocurrencies are becoming less risky investments, which could potentially lead to an influx of new investors into the market.  Could this rise in Sharpe Ratios coupled with increased network activity and trading volume point towards a recovering and less risky crypto market?
    • Hi, That's great, thank you very much. Very helpful! Many thanks.
×
×
  • Create New...
us