29.01.201914:00 Forex Analysis & Reviews: Brent armed with sanctions

Aggressive cuts in Saudi Arabia and US sanctions against Venezuela could allow the North Sea variety to show better dynamics in January from 2006, and Texas from 1984. From the point of view of the monthly increase, Brent's achievements could be the most impressive since December 2016, when OPEC enlisted the support of other countries in the issue production cuts. The same thing took place in December, but this factor began to regain only after the fulfillment of obligations by the countries of the cartel. In particular, the Minister of Energy of Saudi Arabia, Khalid al-Falih, said that Riyadh reduced production to 10.2 million b / d in January and plans to reduce it to 10.1 million b / d in February. In accordance with the agreement of the cartel and other countries-producers, production in this country should fall to 10.33 million b / s.

OPEC took into account the experience of previous years when over fulfilment of commitments made led to an increase in oil prices. At the same time, the support of the "bulls" in Brent and WTI was rendered by their ardent opponent Donald Trump, who planned to change the regime in Venezuela. The states recognized opposition leader Juan Guido as the legitimate president and force Nicolas Maduro to resign under a ban on oil exports. According to White House estimates, Caracas will lose $ 11 billion in revenues from the export of black gold because of the sanctions. Venezuela is the fourth largest supplier of oil to the United States, and its liabilities amount to 500 thousand b / d.

Against this background, the "bearish" news about the increase in production in the States and the first in 2019 increase in the number of drilling rigs from Backer Hughes dissolved in the total mass of positive. By the end of the week, by January 22, hedge funds had increased their long positions in Brent by 17%, which is the biggest indicator since August. Shorts were reduced by 36%, and the size of the three-week cut is the most significant in more than a year.

Dynamics of Brent and speculative positions in the North Sea variety

On the arm of the "bulls" in Brent and WTI is the weakening of the US dollar. The derivatives market assesses the chances of the continuation of the monetary restriction cycle of the Fed at a modest 21%, and rumors about the suspension of the process of folding the balance exert additional downward pressure on the USD index. If the FOMC at its first meeting in 2019 appears to be a pronounced "dove" and the statistics on the US labor market in January disappoint, the US currency will fall into a new wave of sales, which will support black gold.

The fact that the global economy led by China is slowing down has already been taken into account in the futures for Texas and the North Sea futures, but support at $ 64-65 a barrel for Brent is able to stop the attacks of the bulls. At these levels and above, US companies actively increased production in 2018.

Technically, the correction to the "bearish" oil trend is continuing as part of the transformation of the Shark pattern to 5-0. Dropouts from 38.2% and 50% of the CD wave are usually used for sales. They correspond to the marks of $ 64.1 and $ 68.45 per barrel.

Brent, the daily chart