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Oil Is Consolidating after the Recent Fall

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Oil continues to decline, closely approaching the level of $61.0. The latest local low has been updated at around $61.2 per barrel. It is likely that soon 11% of the gap formed after the attack on oil refinery in Saudi Arabia, will be closed. The price has already returned into the range of the upward price channel, in which the asset has been trading since early August. A realistic end to current downtrend may occur at its lower border and support level of $59.5.

The main reason for bearish trend is the same factor that caused the gap and the growth of quotes in mid-September. Bloomberg said that according to informed estimates, Saudi Arabia has now restored its maximum oil production capacity to 11.0 million barrels per day, a week ahead of schedule.

On Wednesday, US published data on crude oil inventories. The US Energy Department reported an increase by 2.412 million barrels against the forecast of a 249 thousand decrease. At the same time, distillate fuel reserves decreased by 2.978 million barrels with a consensus forecast of 733 thousand. The market’s reaction was positive: Brent crude strengthened by more than 1% within half an hour, and broke the $ 62.0 level up. As a result, oil switched to consolidation in the $ 62.0-62.7 zone on Thursday.

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Source: https://olymptrade.com/
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