At the beginning of April the price of oil has grown amid weakening in the USD. In addition, the news from the US shale giants is negative: large companies have suspended drilling rigs operations and reduced the number of new rigs; many companies bear losses, therefore in the near future oil production will drop significantly.
On the other hand, volume of production in Saudi Arabia has reached the new peak in March, while oil from Iran will flood the market as soon sanctions on Tehran’s nuclear program are lifted.
Despite the increasing volume of oil production in some countries, it is clear that in the current situation, energy value is underestimated. It is likely that production volume will settle down soon, and the price will reach stability. By the third quarter oil shall consolidate within the range of 70-80 USD per barrel.
Support and resistance
Support levels: 57.35, 56.50, 56.10, 55.40, 54.60, 54.00, 53.50 and 52.50.
Resistance levels: 59.10, 59.50, 60.00, 60.80, 61.35, 62.50, 63.05 and 65.00.
In the current situation it makes sense to open long positions and pending long positions from the key support levels with take profit at the levels of 62.50, 63.00 and 65.00.
Analytics by LiteForex Investment LimitedPublication source