Last week, Brent crude oil fell again by $1.20 to $48.38 per barrel. Today, the price rose amid the Asian stock indexes growth.
According to International Energy Agency, in 2016 the oil market will be oversupplied. Nevertheless, exporting countries will be increasing their crude oil output in attempt to compensate for the lowering prices. OPEC oil supply is projected to grow by 800K bpd, led by high output from Iraq, Angola and Saudi Arabia.
The oil prices are likely to be affected by the Iranian fuel production, which is likely to reach 500-700K bpd in 2016.
Thus, in the medium term, the oil prices will be mainly affected by excess of supply over demand. Brent crude oil is likely to fall to $45 per barrel.
Support and resistance
The downward trend started in June 2014 and the price is moving towards year lows of $47.00-45.00 per barrel. The price broke through the lower border of the downward channel on the daily chart. Stochastic is in the oversold zone. OsMA remains below the zero line since mid-June. The price may currently rebound to 50.00. 51.00 or 52.50, as maximum.
Support levels: 48.10, 47.00, 46.75.
Resistance levels: 50.50, 51.50, 52.50, 55.00.
Open short positions from the current price or place pending sell orders from 50.00, 50.50, 51.00, 51.50, 52.00, 52.50 with targets at 50.00, 49.00, 48.10, 47.00, 46.75 and stop-loss at 53.30.
Open long positions if only the level of 56.20 (EMA200 on the 4-hour chart) is broken through.