In the current context of global tensions and the resulting energy price volatility, special attention has been paid to these prices. They have shown a multidirectional trend for some time. Brent crude oil prices recovered from a second fall to settle at $39 per barrel. The low demand for energy is keeping the price of crude oil at low levels.
Oil prices have less impact as EU and China continue to improve their consumption. China buys mainly in Q1 and according to the leading analysts, they bought these contracts at an average of $15-25 a barrel in March. This means that the Chinese demand has no influence on the current prices.
During the G20 Energy Ministers’ last meeting, OPEC Sec-General Mohammed Barkindo provided forecasts of oil demand for the immediate future. The official said that the “black” reserves are the largest. goldIn the OECD, ” will only fall below the average five-year value after Q1 2020. In Q3 2020 the highest indicator for commercial reserves was recorded. This is slowly decreasing and may reach the five-year average by Q4. The excess is estimated to be around 12 million barrels.
The size of the spread between Brent Crude Oil and WTI Crude Oil is another factor that can help stabilize oil prices. After the decline of quotes, spreads have narrowed and are now at around $2. The situation is not sustainable for long and the spread will soon start to expand, leading to an increase in trade activity.
The technical picture of the price chart suggests that there may be a possible increase in the near term. Quotes continue to be global on the weekly global timeframe. “expanding formation” The pattern within which an instrument is moving.
The main indicators generally indicate the completion of the correction zone and the start of growth after overcoming the local resistance. On the D1 chart, you can see key levels.
As can be seen on the chart, the price moves within the local lateral channel with the borders of $36.00–44.00, the formation of which has not yet been completed, and therefore the probability of a decline remains at a fairly high level. A sell signal cancelation zone is near $34.00. The upward scenario is either cancelled or delayed significantly if the price crosses the lower border of a channel. If the price reaches the target zone, it is time to take profit on an open long position. A buy position should be opened near $41.00. Once these levels are reached, all of the indicators that indicate an upward trend will be met. Confidence in the continuation will be enough to open a buy position.
In more detail, trade entry levels should be assessed on the H4 chart.
The entry levels to buy are 40.50 & 41.30. A local signal will be available in the next couple of days. Technically, the breakout of two local highs in the lateral channel can be used as a signal. “flag” pattern. After this breakout, the price will not face any significant resistance as it moves towards the target level of $56.00 and the trade can be executed.
If you take into account the daily average volatility of an instrument in the past month of 78 points, it may require 48 trading days to reach the target price zone of 61.00. This time can be reduced by 36 trading days if the volatility of the instrument increases.