Fundamental Analysis:

The Bulls dominated the Crude Oil market on Tuesday as many traders were tempted to test the commodities strength against a plethora of fundamental news that is overshadowing the market currently.

Fears of an extended trade dispute on imposed tariffs between two of the world’s biggest economies (US and China) and hesitation over the supply and demand balance of global oil markets have led to volatile trading recently. Oil markets could be significantly affected by the potential of renewed U.S. sanctions against some important oil producer countries. Moreover, there has been a noteworthy change in the Trump administration that is arguably holding an aggressive stance towards key oil exporting countries including Iran, Venezuela, and Russia. Simultaneously, the Syrian tensions could be adding more to the uncertainty of future relationships between these countries. Further tensions in the Middle East could boost oil prices higher as any military actions could lead to a disrupt of Supply. Unbalanced supply, could be the firm push of Oil prices to $70 per barrel which is Russia’s and Saudi Arabia’s ultimate goal.

Oil exports coming from the Middle East were seen declining last month. All Gulf members saw declines in volumes including Kuwaiti, Qatari, and UAE with only Saudi Arabia managing to ship more quantities last month. Likewise, exports from Latin America persisted in declines last month as supply from Venezuela barely managed to remain above the one million BPD.

From Oil Company’s news, Saudi Aramco may have made a mistake raising crude oil prices for Asian firms. A major Chinese refiner has countered by cutting back on the volume of cargoes from the world’s top exporter.

Import data for 2018, accounts only for the first two months of the year. However, the data confirms China’s imports from Saudi Arabia are lower by 8.9 percent, in contrast to Russia imports which have increased by 20.7 percent.

The Chinese refiner is getting supplied from elsewhere and is clearly not willing to negotiate on high prices as competition flourishes and could easily cover for any shortage. China’s largest supplier of crude oil used to be Saudi Arabia but is currently in second place as Russia was seen to be preferred in the past two years and contracts are signed in order to amend the demand gap for the world’s largest importer.

On other news, the much imposing tour that Saudi Arabia’s Prince is undergoing at the moment has the main goal to create partners and allies and does not come by chance. It is a very strategic positioning as Investors line up to be part of his Oil giant Aramco. The fact was confirmed by news with Saudi Aramco signing eight deals worth $10 billion with French firms on Tuesday.

Finally, the Baker Hughes rig count performed on the 6th of April indicated an increase of 11 rigs from 797 to 808. The active rig count acts as a leading indicator of demand for oil products.

This week’s releases 

The American Petroleum Institute will publish its data on Tuesday while data from the U.S. Energy Information Administration is due on Wednesday. In addition, the market focus will shift towards to the Organisation of Petroleum Exporting Countries and the International Energy Agency monthly reports pending on Thursday and Friday to evaluate supply and demand levels.

Technical Analysis:

Crude Oil is currently trading at $64.60 and has added approximately $1.30 in value since yesterday.

Crude oil prices could be very sensitive to news on Syria tensions and any negative news could work in favour of the black gold. If the bulls continue to run we could see oil prices reaching and even breaching the 65.50 (R1) resistance level. The specific price was tested on from the 26th to the 27th of March where oil prices were moving sideways around that price. This indicates there is strong resistance at that level.

If the financial and fundamental data are to mix up the commodity we could see it moving in a sideways manner between the 65.50 (R1) Resistance level and the 63.50 (S1) Support level.

However, it is obvious the RSI Indicator is approaching the 70 level singling an overbought market. If the bears manage to take over we could see oil aiming towards the 63.50 (S1) Support level and even breaching it. This scenario could also be backed by a surplus to be released on the API news on Tuesday or the EIA news released on Wednesday.

Oil 4 Hour chart below

WTI 10/04/2018 | EconAlerts



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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

source: FXGiants

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