The weakness in the USD was caused by the minutes of the meeting of the US FOMC released on Wednesday and by the report of the US Ministry of Energy. The regulator has again postponed the timing of the interest rate increase. In addition, commercial stocks of oil in the country have declined by 2.7 million barrels.
An OPEC meeting is scheduled for 5 June; the reduction of quotes is not expected at the meeting.
Saudi Arabia is increasing production and export of oil. The supply will continue to exceed the demand and the price is supported only by the hectic political situation in the East and the fact that the interest rate increase in the USA was deferred till autumn. During the European session the price of oil futures continued to decline amid expectations of the weekly data from Baker Hughes on the number drilling rigs used in the US oil fields.
At 15:30 (GMT+3) the data on the retail sales and consumer price index of the USA and Canada will be released. For 16:30 (GMT+3) speeches of the leaders of the Bank of England, Bank of Japan and ECB have been scheduled. Later, at 20:00 (GMT+3) Mrs Janet Yellen, the head of the US fed will make a speech.
Support and resistance
Technically the price of crude oil Brent is between resistance level of 66.70 (ЕМА144) and support level of 62.80 (23.6% Fibonacci). Until the US Fed clarifies its positions regarding the interest rate, the price is likely to move in the channel between the 72.70 (38.2% Fibonacci) and 71.10( ЕМА200) as top levels and 62.80 (23.6% Fibonacci) as the bottom level in the downtrend.
Support levels: 62.80, 64.00 and 64.80
Resistance levels: 67.50, 69.55, 71.10 and 72.70
It is advisable to open short positions from the levels of 67.50 and 66.70 with the targets of 64.80 and 64.00. As light trading it is recommended to open sell positions after consolidation of the price below the level of 62.80. As an alternative – open buy positions below the levels of 71.10 and 72.70.