Early in the second week of June, Brent remains in the “black” and looks rather promising. Last weekend, investors got some good news and are now responding to it.
During the OPEC+ meeting that took place on Saturday, the cartel’s ministers agreed to expand the low oil output period for another month. It means that the oil production decline by 9.7 million bpd will continue until the end of July. During the second half of 2020, starting from August, the decline is expected to be 7.7 million bpd, while from January to and including April 2021 – 5.8 million bpd.
We remind you that the basis for the agreement wase production parameters of October 2018, excluding Saudi Arabia and Russia, whose baseline was 11 million bpd. This is the reason why the number varies for different countries.
This information is making the oil price rise. However, even with all things considered investors ignore the fact that Saudi Arabia raised prices for all buyers in July.
In the H4 chart, Brent is moving within the uptrend towards 43.43. Later, the market may correct to the downside to reach 38.70 and then form one more ascending wave with the target at 47.50. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving above 0; it has entered the histogram and is currently growing steadily.
As we can see in the H1 chart, Brent has broken 42.00 to the upside and may test this level from above. After that, the instrument may grow with the short-term target at 43.43 and then start a new correction to reach 38.70. Later the market may form one more ascending wave inside the uptrend towards 43.00. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is rebounding from 80 and is expected to correct towards 50. After that, the line is expected to resume moving to return to 80.