Oil prices decline by 1% following a surge in US crude inventories
FUNDAMENTAL OVERVIEW:
Oil prices experienced a second consecutive day of decline, falling over 1% on Wednesday due to increased US stockpiles and indications suggesting that the OPEC+ producer alliance is unlikely to adjust its output policy at an upcoming technical meeting next week.
Prices have pulled back after reaching their highest level since October last week and are currently approximately 3% above the average closing price during the first week of March.
A significant increase in US crude inventories and the anticipation of possible inaction by OPEC+ in the upcoming week have led to additional “unwinding” in oil prices. Profit-taking has intensified following the rally in mid-March.
Market sources, citing figures from the American Petroleum Institute, reported that crude oil inventories in the United States increased by 9.3 million barrels in the week ending March 22. Distillate inventories saw a rise of 531,000 barrels, while gasoline stocks declined by 4.4 million barrels.
Earlier this month, OPEC+ reached an agreement to prolong output reductions of approximately 2.2 million barrels per day (bpd) until the conclusion of June. However, Russia and Iraq have faced challenges in addressing overproduction, casting doubt on the group’s adherence to the cuts. According to a Reuters survey, OPEC surpassed its targets by 190,000 bpd in February.
BRENT CRUDE OIL TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Brent Crude Oil is currently trading within an up channel.
Brent Crude Oil is positioned below the 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 86.23
Immediate support level: 84.89
HOW TO TRADE BRENT CRUDE OIL
After a sharp decline, Brent Crude Oil initially found support and reversed its price trajectory upwards. Currently, it’s attempting to climb again, but encountered resistance, causing the price to retreat towards the support zone. If this level is breached, it may test its previous significant support level.