Brent crude price capped at 100MA and slipped on Monday after China posted the weak economic growth numbers. The crude oil price lost 150cents to close at 66.00$ formed a bearish candle on the daily chart.
Brent has a strong resistance between 67.40-68.60$ includes 100MA and early May low. As long as the price of crude oil trades below said resistance levels we may see profit booking on every spike. Any decisive break out above 67.40 could rally to the higher end of the resistance zone and even further towards 69.20$ in the form of good short covering.
In the near-term, the price action indicates a range bound movement in the market between 62.00-67.40$.
The import support level is placed at 65.40$ its 50MA, followed by 64.70$ its 20MA.
Turning to the positioning data ING said, Exchange data shows that Money managers liquidated 3,863 lots of long position in ICE Brent with them now holding a net long of 244,143 lots
According to the IEA’s official report “In 1H19 oil supply has exceeded demand by 0.9 mb/d. Our latest data show a global surplus in 2Q19 of 0.5 mb/d versus previous expectations of a 0.5 mb/d deficit.”
The report also highlighted the concern of the oversupply. “The widely-anticipated decision by OPEC+ ministers to extend their output agreement to March 2020 provides guidance but it does not change the fundamental outlook of an oversupplied market.”
Medium-term view: The daily A-B-C corrective structure is pointing 2018 lows. A clear break down below 59.00$ will strengthen this view.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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