A new stage of the OPEC+ agreement is coming into effect. Starting from August 1st, the daily reduction of oil production is 7.7 million barrels, which is lower than the previous value, 9.7 barrels. This restriction is supposed to be valid for countries members of OPEC+ until the end of the year.
Market players are worried by the possibility of oversupply. It may well be that a stable price for oil might sooner or later boost the USA to increase oil extraction. This is exactly what is putting pressure on the oil right now.
Another thing that pushes the oil price is the coronavirus: the number of new cases is going up, which means that all pandemic-related risks are not going away anywhere.
In the H4 chart, Brent is still correcting towards 42.80. After reaching this level, the asset may form one more ascending wave to break 44.04 and then continue trading upwards with the short-term target at 45.33. Later, the market may correct towards 44.50 and then start another growth to reach 46.46. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 in the histogram area. After the line leaves the area and breaks 0 to the upside, the correction may be over.
As we can see in the H1 chart, Brent is consolidating around 43.30; it has already broken this level to the downside and may continue falling to reach the correctional target at 42.80. After that, the instrument may start a new growth to break 43.30 and then continue trading upwards to reach 44.04. And that’s just a half of another ascending wave.
From the technical point of view, this idea is confirmed by Stochastic Oscillator: its signal line is moving to rebound from 50 to the downside. Later, the line is expected to fall to reach 20 and rebound from it. After that, the correction may be over. If later the line breaks 50, the price chart may boost its growth.
Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.