On Tuesday, the quotes of crude oil Brent fell to 63.81; however, later, the losses have been regained. Today, investors are waiting for the U.S. weekly report on oil and oil products inventories. Most analysts polled by Reuters predict that the stock will decrease to 2.3 million barrels.
Market participants are also interested in the information on oil production. The capacity of oil refineries in the USA has increased by 0.6% a week ago, up to the level of 91.8%. Experts believe that the rise in this index can have a negative impact on oil prices.
Additional event, which can affect energy market, is the outcome of the US Fed meeting. Recall that at the FOMC meeting, which is ongoing for the second day, future monetary policy is being discussed. Market participants would like to get information about the timing of the interest rates increase in the final documents of this meeting. It is possible that due to weak macro-economic statistics, timing of interest rates changes will be shifted. In case after meeting commentary is pessimistic, the USD will weaken, while oil prices will go up.
Support and resistance
Resistance levels: 65.33 (Tuesday’s highs), 65.40 (upper line of Bollinger bands), 70.00 (important psychological level).
Support levels: 63.81 (Tuesday’s lows), 62.08 (lows of 23 April, Fibonacci retracement of 23.6%), 60.40 (middle line of Bollinger bands) 59.00 (Fibonacci retracement of 50.0%).
It makes sense to open sell positions from the level of 63.80 with the nearest target of 62.10 and the next one at 60.40. If the price breaks down the level of 65.70, it will open the door to 67.40 and 70.00.