A serious rally in the oil market, associated with global economic instability and the development of the Ukrainian crisis, has been going on for more than two months and is unlikely to stop in the near future. Last week, the quotes of WTI Crude Oil resumed growth and rose to the level of 106.25 (Murray [7/8]), which is now being actively tested.
The market is in a state of considerable uncertainty, as it is influenced by several opposite factors. The pressure on energy quotes is exerted by the complex epidemiological situation in China, where an increase in the incidence of coronavirus is recorded. At the moment, Beijing remains under threat of complete lockdown, while the financial and industrial center of Shanghai has been in strict isolation for more than a month. The continued tightening of quarantine restrictions continues to jeopardize the demand for oil from the Chinese economy, which is its first global consumer.
On the other hand, the embargo announced today on the supply of Russian oil and petroleum products to the EU countries contributes to the growth of quotations. The head of the European Commission, Ursula von der Leyen, announced her readiness to refuse the purchase of raw materials by the end of this year. However, an exception will be made for a number of countries most dependent on Russian oil, for example Hungary and Slovakia. The embargo on Russian resources, which account for 26% of imports to the EU, creates the problem of replacing the missing volumes. It will not be easy to solve it, since global production is already unable to meet demand. Meanwhile, the OPEC+ cartel is in no hurry to increase oil production, as its members are satisfied with the current windfall. It is expected that during the meeting scheduled for Thursday, a decision will be made to maintain a moderate pace of production growth.
Another factor supporting prices is the reduction of reserves of "black gold". According to the latest data from the American Petroleum Institute (API), a decrease of 3.479M barrels was recorded. A similar report from the Energy Information Administration of the US Department of Energy (EIA) will be released today, which may also reflect a downward correction of 0.829M barrels. Under these conditions, oil quotes may continue the upward trend.
Consolidation of the price above the mark of 106.25 (Murray [5/8]) will give the prospect of growth of the trading instrument to the levels of 112.50 (Murray [6/8], Fibo retracement of 23.6%) and 118.75 (Murray [7/8]). If the price consolidates below the middle line of the Bollinger Bands and the 100.00 mark (Murray [4/8]), the decline will resume in the area of 93.75 (Murray [3/8]) and 87.50 (Murray [2/8], Fibo retracement of 61.8%).
The indicators do not give a single signal: the Bollinger Bands are horizontal, the MACD histogram is at the zero line, its volumes are insignificant, and the Stochastic is directed downwards.
Resistance levels: 106.25, 112.50, 118.75 | Support levels: 100, 93.75, 87.5