Brent crude oil has updated the annual maximum near $69.5/b, but it is likely that bulls will move the price up even more. It is quite possible that it will test the upper limit of the current medium-term price channel near $70. However, after this, a correction should occur, because the asset has no fundamental reasons to break through the channel and accelerate its growth rate. At least for now.
Although the fundamental background is generally positive. Baker Hughes announced the number of operating rigs in the United States last Friday. It decreased by 8 to 816. From the middle of November 2018, the number of drilling rigs fell by 72. The United States also announced production data, in January it dropped to 11.9 million barrels per day.
As an accomplice, the oil market was supported by optimistic Chinese economic data, as well as the possibility of tougher sanctions against Iran and new supply disruptions in Venezuela. The manufacturing sector of China unexpectedly returned to growth for the first time in four months during March, showed data on Monday. PMI index rose in March more than expected - up to 50.5 points from 49.2 in February – and it’s the highest point since September last year.
In addition, Bloomberg reports that oil production by OPEC in March decreased by 295 thousand barrels per day, to 30.385 million b/d. Saudi Arabia, the largest oil producer in OPEC, reduced its production to 9.82 million b/d, a minimum of four years. All these factors listed above provide excellent support for oil’s current uptrend.