Brent Crude Continues Rising

By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

Brent recovered to the levels it last reached on December 7. Today, on Monday, January 21, 2019, the instrument is trading at $62.77 USD and tending to keep this positive momentum.

Over the last week, there were a lot of different and sometimes even opposite signals, but investors chose the ones more favorable to the bulls and oil prices started moving upwards. The US Department of Energy reported that Crude Oil Inventories declined slightly, but both distillates and gas increased significantly. While the refinery utilization declined, the oil extraction went up to 11.9M bpd (+200K barrels per week), which means that rather high oil prices (in comparison with December) are pretty comfortable for shale producers.

At the same time, numbers from Baker Hughes published last Friday weren’t really impressive. The Oil Rig Count was 852 units as the indicator lost 21 units. In the case of gas, the corresponding indicator lost 4 units. In total, the number of rigs in the USA decreased by 25 units and right now equals to 1,050 units.

Why does the indicator go down? Most likely, oil producers aren’t really sure that oil price movements over the last 5 weeks indicate a trend reversal instead of a long-term correction. As such, they turn patient and watch market developments unravel.

The USD got stronger a bit last week, but its behavior doesn’t seem to worry oil investors too much so far.

To more clearly see what is happening to Brent, one has to look at the daily chart. It can be seen that the candlestick of December 26th, 2018 formed Engulfing pattern and started a new correction to the upside. In addition to that, there was a convergence on MACD, which indicated a possible pullback. The price is getting closer to the retracement of 38.2% at $64.30. The next target is the retracement of 50.0% at $68.55.

The H4 chart shows a stable uptrend. However, it should be noted that after breaking the previous high the price may start a new pullback towards the support level at $61.50. Later, the instrument is expected to form a new rising impulse with the target at $65.60.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Having majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.