BRENT Analysis: Expectations of US output increase bearish for BRENT

January 23, 2020

By IFCMarkets

Expectations of US output increase bearish for BRENT

On the daily timeframe #C-BRENT: D1 has breached below the 200-day moving average MA(200), which is declining. This is bearish.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 61.46. A level below this can be used as an entry point for placing a pending order to sell. The stop loss can be placed above 62.46. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (62.46) without reaching the order (61.46), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

EIA forecasts US domestic crude oil output increase. Will the BRENT decline?


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The Energy Information Administration forecast a monthly rise in US shale oil production of 22,000 barrels a day to 9.2 million barrels a day in February in the latest monthly report issued Tuesday. This followed another bearish sign for oil – Baker Hughes reported last Friday that the number of active US oil rigs rose by 14 to 673 this week. That is the first increase in four weeks. In the previous monthly report the Energy Information Administration forecast an oversupply of global petroleum relative to consumption. And trade group the American Petroleum Institute late Wednesday report indicated US crude supplies rose by 1.6 million barrels last week when a decline was expected. A spike in geopolitical tensions in Middle East is an upside risk for oil while output is seen rising in US.

 

Indicator VALUE Signal
RSI Neutral
MACD Sell
MA(200) Sell
Donchian Channel Sell
Parabolic SAR Sell
Fractals Sell

 

Summary of technical analysis

Order Sell
Buy stop
Stop loss > 62.46

Market Analysis provided by IFCMarkets