Last week, the American Petroleum Institute (API) reported the reduction of commercial stocks of oil in the USA and after that the price of oil futures went up. The closing price of last week was at the level of $66.82 per the barrel of crude oil Brent.
This week started with the rise in the USD, which has affected oil prices and caused the decline to the level of 64.00 on Tuesday.
The situation is aggravated by the news from Saudi Arabia about reaching the highest level of oil exports since 2005. It is worth remembering that, at the OPEC meeting, which is scheduled for June, reduction of quotes for oil production is not expected.
Support and resistance
On the daily chart the price stopped near the moving average ЕМА144 (66.65), which is a resistance line. From the bottom the price is being pushed by the support level of 62.80 (Fibonacci retracement of 23.6%) and the line ЕМА50. The price is moving in the upward channel (green color) and can go up to resistance levels of 71.00 (ЕМА200) and 72.75 (Fibonacci 38.2%); however further growth is unlikely given the fundamental news.
Indicators on the daily chart also suggest the decline in price. OsMA histogram is declining in the negative zone. Stochastic is in the sell zone.
Resistance levels: 66.65, 67.85, 69.50 and 71.00, 72.75
Support levels: 63.75, 62.80 and 61.50
On Wednesday, 17:30 (GMT+3) U.S. Ministry of Energy will release report on oil and oil products inventories in the warehouses of the country. It is expected that the commercial stocks of oil will decrease this week by 2 million barrels, which can trigger the rise in price of oil; however, it is unlikely that the prices will not go above resistance levels of 66.65-67.00 and only for the short time. It is recommended to place SELL-Limit orders at the levels of 66.65, 67.85 and 69.50 with the targets of 64.65, 63.75, 62.80, 61.50, 59.00 and 55.00.