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On Wednesday, oil prices went up after 2 consecutive days of falling. Oil pared its losses thanks to an uncontrolled wildfire at Fort McMurray, the heart of Alberta’s oil sands region, which reduced the output there. The surge of oil today is anticipated to be temporary due to the worry about global oil oversupply, a stronger dollar and weakened equity markets.
The concerns over rising production from the biggest oil suppliers in the Middle East has made investors worry about record high crude stockpiles, putting downward pressure on oil prices in the last two days. In particular, Iraqi exports are expected to reach 3.4 million barrel per day in April, while production in Saudi Arabia could return to 10.5 million barrels per day. Exports from Iran have nearly reached 2 million barrels per day, which are nearly double the amount at the beginning of the year.
According to Al Walker, chief executive of oil producer Anadarko Petroleum Corp, the company is getting ready for new drilling projects due to the increase in oil prices since February. The company believes that the outlook for commodity prices, especially oil, has improved. The worst of the oil downturn might be over.
The market is waiting for US crude oil inventories which are to be released today with concerns that the data will show that inventories hit a new record high. The inventories, measure the number of barrels of crude oil held in inventory by commercial firms. Inventories in the week to April 29, are predicted to rise by 0.6 million compared to the previous week.
Fig. BRENT D1 Technical Chart
Brent has just retreated from the resistance level at 48.24, the highest level of the year to around 45.14. Overall, the commodity is in an up-move as indicated by the green SAR arrow’s appearance. However, with the RSI pointing downwards, the price is likely to continue the downtrend in the short term, retesting the support level at 42.98 before bouncing back.
Buy Digital Call Option at 42.98 valid until May 6, 2016
Buy Digital Put Option at 45.14 valid until May 6, 2016