Despite increasing oil reserves for the last week of September in the US, the price of Brent crude oil holds near the level of $49.00 per barrel.
The price was supported by positive Manufacturing PMI data for September from China that showed an increase from 49.7 to 49.8 points. The price is also supported by shrinking oil production in the US and stable world demand. On the other hand, it is under pressure from excess in supply, as OPEC countries increase their output, expectations of Iranian exports, world stock markets fall and anticipations of the interest rates increase in the US.
Meanwhile, as China and the US remain the largest oil consumers, any strong macroeconomic data from these countries have a positive effect on the price of oil.
Support and resistance
On the 4-hour chart, a contracting triangle between the levels of 49.00 and 47.20 seems to be forming.
The price growth is restricted by the strong resistance at 49.00 (EMA200 on the 4-hour chart) and any strengthening up to the level of 50.00 (EMA50 on the daily chart) can only be considered as a correction. A trend reversal can happen after a breakout at 51.00. At the same time, a breakdown of the level of 47.00 could lead to a further fall towards 42.50 (August and year lows).
On the 4-hour and daily charts, OsMA and Stochastic recommend long positions.
Support levels: 48.50, 47.20, 46.25, 45.25.
Resistance levels: 49.00, 50.00, 51.00.
Long positions can be opened from current prices with the target at 49.86 and stop-loss at 48.90.
Short positions can be opened after the price consolidation below the level of 48.25 with the target at 47.31 and stop-loss at 48.40.