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Brent: drivers of growth have been exhausted? _23/03/2016

Technical analysis and trading recommendations -

According to information leaked to the press, some US companies extracting shale oil, resumed production at the wells previously mothballed. According to the calculations of the companies, they could recover up to 85% of production with a minimum payback period, which ranges from 48 to 50 dollars per barrel.

Earlier, in late February, OPEC's Abdullah al-Badri, Secretary General noted that the US shale companies can easily increase production if prices will rise by a decline in production in other countries. Thus, the efforts of OPEC and other major oil-producing countries to freeze or reduce oil production will be reduced "to zero" in the reduction of prices to the level of $ 50 per barrel.

The major bullish factor for oil prices - the Fed's decision on interest rates in the last March meeting - has largely taken into trading by the market.

Support for oil prices has yet been forthcoming meeting of OPEC and other major oil-producing countries, which will take place on 17 April in Qatar.

Among the participants in the oil market has revived hope that the major oil exporters will be able to agree on limiting production levels regardless of the actions of Iran, which is refusing to freeze oil production.

At the same time, oil production in the United States itself is reduced at a slower pace than expected. Oil companies have reduced their costs and increased efficiency. Also started oil production at new sites in the Gulf of Mexico.

US crude stocks are kept near the maximum volume of 500 million barrels for the first time since 1930.

If OPEC's upcoming meeting will be disappointing, prices fall sharply again against the background of the lack of further progress, the oversupply of oil in the world.

In the case of positive results of the upcoming meeting in Qatar, oil prices react sharp but short-lived growth.

The price of Brent crude oil is on the strong level of resistance 41.50. Further growth of prices in the case of reaching an agreement may be limited following the strong resistance level of 44.00 dollars per barrel of Brent crude oil, which passes through the 200-period moving average on the daily chart.

As reported yesterday, the American Petroleum Institute (API), the growth of business in US oil inventories last week by 8.7 million barrels (vs. + 1,5mln).

Today at 14:30 (GMT) US Department of Energy will publish data on changes in stocks of oil and petroleum products in the last week. Expected increase in stocks by 3 million barrels. If the findings are confirmed, the price of Brent crude oil could fall within a narrow range of 42.30 - 40.30 dollars per barrel.

Wednesday, 23 Mar, 2016 / 12:19

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