Crude oil Brent is still traded in the upward channel. The rise in price, which amounted to 9.6% last week, was provoked by the US news that the number of operating drilling rigs fell to the lows of 2010, reaching 802 units.
The other factor, which had a positive effect on oil, was the news that Central Bank of China decided to support economic growth by reducing requirements to the reserves of the commercial banks. Therefore, most of the money supply will go the real sector of economy by way of credits.
However, there are concerns that such policy can trigger economic overheating, or even lead to the financial “bubble”. A series of defaults and demurrage of economic capacities will devalue investments of the American and European people into Chinese economy. In case of the negative scenario it is possible that the price of oil will go below 25 USD per barrel.
Support and resistance
The nearest resistance level is 64.06 (1/8 Murray). Support level:62.50 (8/8 Murray).
It is recommended to open long positions after breakdown of the level of 64.20 with protective orders at 64.00 and the target of 67.55.