This week Brent crude oil price was volatile. On Tuesday, an agreement reached on Iranian nuclear program lead to the price of oil drop to $56.41 per barrel but it grew later. Initially, the price drop was associated with markets expectations of a sharp increase in oil supply as Iranian Oil Minister declared that the country is ready to produce 1 million barrels a day. However, experts suggest that until the next year Iran’s total output cannot exceed 500 thousand barrels.
Furthermore, this agreement should still be passed through the US congress where it is likely to face hard opposition. Thus, a substantial increase in oil supply on the markets in the nearest future is unlikely and the price is going to remain within a wide range 55.85-59.65. Significant price movements are only possible in case of unexpected developments on the Iranian matter.
Support and resistance
At present, the price is testing the middle MA of Bollinger Bands at the level of 57.65. Its breakout would allow the price to grow farther towards 58.20, 58.85 and, possibly 59.65. In case of the price consolidation below 57.20, the downward movement can continue towards 56.60, 55.85.
Support levels: 57.20, 56.60, 55.85.
Resistance levels: 57.65, 58.20, 58.85, 59.65.
Open short positions from 57.20 with targets at 56.60 и 55.85 and stop-loss at 57.60.
Long positions can be opened after the breakout of the level of 57.65 with targets at 58.20, 58.85 and stop-loss at 57.30.