Brent crude oil continues to rebound from 22 April low which. On Monday Brent up by a 6% and Managed to close near 20MA.
Oil market log first weekly gain in over a month as OPEC+ production cut kicks in, and more countries announced to begin easing lockdown restrictions. The combination of these two factors is helping the beaten-down oil prices to rebound and also suggest oil fundamentals are improving. Whereas we still believe that even after the lockdowns, the demand crisis will remain in place due to travel restrictions.
In April, OPEC+ agrees record cut to oil production by 9.7 million barrels a day in May and June 2020. It is the deepest cut ever agreed to by the World’s oil producers.
Reuters reported that “Goldman’ patiently bullish’ on oil as fundamentals improve.” Goldman Sachs Commodities Research on Friday raised its second-quarter and full-year forecasts for global oil benchmark Brent crude futures, citing signs of improvement in fundamentals with quickly declining supplies and improving demand as lockdown measures are eased gradually. The Wall Street bank raised its second-quarter 2020 Brent price forecast to $25 per barrel from $20 previously, while also slightly raising its full-year forecast for Brent to $35.8 per barrel from $35.2″.
Coming back to the technical side, at the time of preparing this on Tuesday morning, the Brent crude is trading tad above 20 simple MA. The daily RSI and oscillators are remaining bullish. The key support level placed at $25.80 and $24.90 levels. If the price starts moving up again, key resistance levels to watch out are at $29.90, $31.00 levels, an $33 its 50MA.
Here’s a look at all that can influence price this week:
- Bullish RSI and oscillator
- Monthly candlesticks suggest a double bottom at $25.50 (closing basis)
- Held the 12-year descending trendline (Monthly chart)
- Breakthrough three months descending trendline (Daily chart)
Cues from the above bullish factors comfort us to retain our bullish target of $30+. In Q2 the price is going to consolidate between $20-37 levels, pivotal located at $25 (closing basis).
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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