Brent crude surpassed $68 per barrel, thereby setting a new annual maximum. At the moment, the cost of black gold has corrected to the $66.6 level, but it is quite possible that bears will try to break through below this mark. In this case, $ 66.0 and $ 65.3 levels will create a support zone. In extreme cases, the lower limit of the medium-term price channel ($ 64.6) will do the trick. However, the last scenario is possible only supported by some negative news, even with current volatility. Most likely, after the correction, the bulls will continue to conquer new heights.
The fundamental background for uptrend is favorable in general. Crude oil inventories announced on Wednesday, showed minus 3.86 million barrels, with a forecast of 2.65 million. Gasoline stocks also turned out to be worse than the consensus forecast. Such statistics certainly come in handy for the buyers. OPEC reported a production decline of 221 thousand barrels per day in February. The average daily production by the cartel is 30.55 million barrels per day. Also, support for the bulls was provided by US oil production data, which decreased by 100 thousand to 12.0 million barrels per day. This is the first reduction in three months.
In the mid-term, the International Energy Agency (IEA) does not exclude the emergence of an oil shortage due to production decline in Venezuela and increased demand. Agency's report states that in the second quarter of 2019, the global oil demand could exceed the supply by 500 thousand barrels per day.
Uncertainty is brought on the market by China. The meeting between leaders of the United States and the People’s Republic of China for signing a trade agreement won’t happen this month. It will take place in April by the initiative of the Chinese side. In addition, recent macroeconomic data in PRC does not inspire optimism: over the past 2 months, industrial growth in the country has slowed to a minimum of 17 years. This indicates a slowdown in the second world economy.