Crude oil is near its two-week highs despite the correction that occurred morning. Commodity sector is still very volatile, while there is a good deal of news and issues for the crude. Brent crude futures are currently trading at around $65.84, WTI is at $62.09, both types losing around 0.50%. The WTI April futures are to expire today, which can also have some influence on the crude price.
Baker Hughes published a new report on active oil rigs Friday. The report showed the number had grown by 4, which overall confirmed the uptrend. The market reaction was, however, very much moderate, which can actually be explained by the fact that the markets are quite used to such reports; even 6 months ago, it was clear the shale oil industry would contribute to raising the number of rigs, as big money had been invested here, and the US were steadily expanding oil production and export. So the investors just ignore such stats unless they are truly surprising.
Meanwhile, the US dollar is somewhat strengthening against the euro, which prevents the crude from recovering. This week, a Fed meeting is being held. This will be the first one for the new governor Jerome Powell; however, his monetary policy views are well known even before the meeting: Mr Powell is quite sure the US economy is stable and solid, while the job market will give some additional support to it. As for inflation, he says, it is also expected to rise, although not right now.
If the Fed hints on some more decisive steps regarding rising the interest rate this year, the greenback is very likely to keep rising, which won't allow the crude to recover. Overall, the US and OPEC indicators also give some tips on selling the crude or consolidating it near the current prices, without any major growth anyway.
Technically, Brent price is trying to revert the current midterm trend, and the short term outlook with mostly positive, with a new ascending channel forming. This micro trend may break out the resistance at $66.80, with the price then going to the projection channel and $69.75, another resistance, but far more important. Conversely, if the price manages to break out the support at $64.64, it may well return to the mid term descending trend, with the next target at $60.00, the lower projection channel support.
Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Disclaimer
Any forecasts contained herein are based on the authors' particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.