Oil starts for health

If the fourth quarter and the whole of 2018 were the worst for black gold from October-December 2014 and from 2015, respectively, then the beginning of the new year Brent and WTI started for health. Market faith in the favorable impact on the prices of the OPEC production cuts and optimism regarding the US-China trade negotiations have allowed oil to add more than 8% to its value since early January. On hand, the bulls have played and "pigeon" rhetoric of Jerome Powell, who focused on the flexibility of the Fed in terms of unhurried inflation. Investors do not expect to repeat the exploits of the dollar in 2019, which allows them to look at the prospects of black gold with moderate optimism.

The active sales of Brent and WTI at the end of 2018 coincided with the collapse of US and global stock indices, which were catalyzed by the December meeting of the FOMC. Contrary to forecasts of a slowdown in the US economy, the central bank did not intend to pause the process of normalizing monetary policy. He obviously made a mistake, and Jerome Powell had to fix it in January. The Fed chairman cited the example of 2016, when instead of the planned four acts of monetary restriction, only one occurred. The reason is the slowdown of the Chinese and world economies. Investors took the hint and began to buy stocks, which is usually perceived as improving the global risk appetite and supporting oil prices. As a result, hedge funds and other speculators were fools who, after three weeks of building up net-long positions, began to reduce them.

Dynamics of Brent and speculative positions on oilInv-jAQVgnAbkpebmjI8Pel5wO9mRlJDen0cjLQXThe bears on black gold were inspired by the estimate of the consulting company JBC Energy, which expects growth in US production above 12 million b / s in early January, and weak statistics on business activity in the manufacturing and non-production sectors of the United States, indicating a slowdown in the US economy. In this scenario, global demand will be under threat. At the same time, a number of banks and financial companies began to actively reduce oil forecasts: Goldman Sachs, from $ 70 to $ 62.5 per barrel in three months, S & P Global Ratings, from $ 65 to $ 55 per barrel for the North Sea variety by an average of 2019.

At the same time, the International Energy Agency, as before, predicts an increase in global demand by 1.4 million b / s, which is significantly higher than in those times when black gold was quoted at $ 100 per barrel and higher. The gradual recovery of US stock indexes, the weakness of the US dollar, the reduction in OPEC production and excessively low speculative oil positions increase the risk of a correction to the current downward trend in Brent and WTI. The main thing is that the negotiations between Beijing and Washington should be completed successfully, and the fears of investors over the gloomy prospects of the world economy should not be resuscitated.

Technically, after reaching an intermediate target of 78.6% for the Shark pattern, the probability of correction of the North Sea variety in the direction of 23.6%, 38.2% and 50% of the CD wave increased.

Brent, the daily chart

DvmHwS59G1Npoj3-3TB1GvnBD6zLNhYgawM2Q-qKThe material has been provided by InstaForex Company - www.instaforex.com