Oil prices rose significantly on Wednesday, reacting to the publication of EIA Crude Oil Inventories report, according to which, the volume of oil reserves for the week ending November 15 increased by 1.379 million barrels after an increase of 2.219 million barrels over the past period. Analysts had expected an increase of 1.543 million barrels. At the same time, Cushing Crude Oil Inventories fell by 2.3 million barrels to 44.2 million barrels, while gasoline reserves increased by 1.8 million barrels to 220.8 million barrels. The volume of oil production in the United States did not change compared to last week and amounted to 12.800 million barrels per day.
Additional support for oil quotes was provided by another aggravation of the situation in the Middle East. Another attack on oil tankers occurred in the Persian Gulf, after which the US Abraham Lincoln aircraft carrier strike group sailed through the Strait of Hormuz.
Support and Resistance
In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting ambiguous nature of trading in recent days. MACD has reversed upwards preserving a sell signal (located below the signal line). Stochastic reversed upwards being located approximately at the center of its area, pointing to the balance of power in the ultra-short term.
To open new trading positions, it is necessary to wait for the signals from technical indicators to be clarified.
Resistance levels: 57.25, 58.03, 58.42, 59.00.
Support levels: 56.82, 56.15, 55.70, 55.04.
To open long positions, one can rely on the breakout of 57.25. Take profit – 58.42. Stop loss – 56.40 or 56.50.
A breakdown of 56.15 may be a signal for new sales with target at 55.04 or 54.73. Stop loss – 56.82.
Implementation time: 2-3 days.
Currency Market Report
EUR showed a flat dynamics of trading against USD on Wednesday, locating near the local highs, updated on November 18. Further development of the “bullish” trend was hindered by the publication of weak macroeconomic statistics from Europe. The markets reacted negatively to the release of the report on financial stability in the euro area, which, among other things, pointed to the growing risks of a slowdown in the European economy against the backdrop of continuing uncertainty in world markets. German Producer Price Index in October fell by 0.2% MoM after rising by 0.1% MoM in the previous month. In annual terms, the indicator decreased by 0.6% YoY after the decrease by 0.1% YoY in the previous month. Analysts had expected decline by 0.4% YoY. Today, the instrument is trading in both directions. Investors are awaiting speeches by ECB representatives, Yves Mersch and Luis de Guindos, as well as the publication of information on the last ECB meeting on monetary policy.
GBP ended Wednesday trading with flat dynamics against USD. During the day, the instrument was moderately reduced, but by the end of the afternoon session, it managed to fully recoup. Wednesday’s macroeconomic background remained fairly calm, so the previous drivers were in the spotlight of investors. Markets are following the election campaign in the UK, responding positively to a series of opinion polls that revealed a slight conservative advantage. The election to the British Parliament should be held in mid-December. If Boris Johnson’s party wins the election, the Parliament will probably have time to ratify the agreement with the EU, and the UK will be able to leave the union, bypassing the so-called hard Brexit.
AUD showed a moderate decline against USD on Wednesday, reversing downwards after quite active growth the day before. The pressure on the instrument again comes from the uncertainty surrounding US-China trade negotiations, which seem to be at an impasse. Donald Trump said that if the signing of the deal breaks, then in December, import duties on Chinese goods may be raised even higher than previously planned values. In addition, the complication of relations between the countries was facilitated by the meeting of the US Senate, which approved bills supporting civil unrest in Hong Kong. Beijing has already commented on the decisions taken by the Senate, calling them “interference in China’s domestic policy”.
USD showed a slight increase against JPY on Wednesday, but again returned to decline during today’s Asian session. The emergence of the uptrend yesterday was due to weak macroeconomic statistics from Japan. Japanese exports went down by 9.2% YoY in October after the decline by 5.2% YoY in the previous month. Analysts had expected decline of 7.6% YoY. Imports for the same period decreased by 14.8% YoY after a decrease of 1.5% YoY in September. Forecasts suggested a decrease of 16% YoY. Support for the Japanese currency, in turn, is provided by an increase in demand for safe assets amid worsening prospects for trade negotiations between the US and China, a breakdown of which can lead to a further decline in the global economy.