Brent Is Under Pressure
Andrey Goilov | Aug 15, 2022 08:01AM ET
The commodity market is selling at the beginning of another August week. Influenced by fundamental news, Brent is retreating down to $97.20.
Saudi Aramco (TADAWUL:2222), officially the Saudi Arabian Oil Company, which is one of the largest oil production companies in the world, announced its plans to increase oil extraction. This news resulted in a wave of sales in oil – an increase in supply puts pressure on prices. Investors took this information very seriously: Saudis are the only country that has available capacities to increase production. Earlier, Saudi Arabia was mum on this issue.
The recent rally in the USD also made energy prices fall. The strong “greenback” makes buying commodities less available for most investors.
The world put its recession concerns on the back burner for a while, but definitely shouldn’t forget about them.
On the H4 chart, Brent is still correcting up to 101.70 and has already reached the short-term target at 101.50. Possibly, today the pair may form a new descending structure towards 96.40 and then complete the ascending wave by reaching 101.70. After that, the instrument may resume trading downwards, with the target at 92.50, at least. From the technical point of view, this scenario is confirmed by the MACD Oscillator: its signal line is moving towards 0 outside the histogram area. Later, it may rebound from 0 and resume growing to reach new highs.
As we can see in the H1 chart, after finishing the descending structure at 98.15 along with the correction up to 99.65, Brent is trading downwards to reach 96.35. Later, the market may start another growth with the target at 101.70. From the technical point of view, this idea is confirmed by the Stochastic Oscillator: its signal line is moving near the lows below 20. Later, the line may grow to rebound from 50 and resume falling to return to 20.
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