21.05.201914:23 Forex Analysis & Reviews: Brent is preparing for war

Donald Trump scares Iran with "enormous power." When there are groups that drive the market in multiple directions. As a rule, the price of an asset regularly slips into consolidation. Oil is no exception. Since the beginning of the year, its main varieties have grown by about 40% on expectations that the end of the trade war will increase global demand, and a reduction in production by OPEC and other producing countries, including Russia, will balance the market. BofA Merrill Lynch is sure that this will happen already in 2019, and black gold will face a deficit in 2020. The resumption of the trade conflict between the United States and China made adjustments to this coherent theory and it would seem that they should have forced speculators to take profits on long positions if Iran had not intervened.

For the time being, Tehran's loud statements to close the Strait of Hormuz through which about 16.8 million b/s passes or about one-third of all deliveries in the world using sea and ocean tankers, seemed to be idle shots into the air. However, the attacks of four ships and two of which belonged to Saudi Arabia, which forced investors to reconsider their views. In response to the bombings in Baghdad, Iran could have applied, according to the White House. Donald Trump began to threaten the latter with "enormous force".

Dynamics of oil transportation

Growth of Brent and WTI was promoted by the information on the desire of OPEC led by Saudi Arabia to prolong the agreement on the reduction of production to the end of 2019. Riyadh asks not to be deceived about the current price increase and to continue the implementation of the plan to balance the market. There is information that with current oil prices that suit Russia. Moscow will insist on reducing the cut from 1.2 million b/s to 201 million b/s as specified in 2018, but the Saudis call this idea not the best solution.

At the same time, it is necessary to understand that the "bulls" in Brent and WTI deprived an important Trump card in the form of expectations of growth in global demand for black gold after the end of the trade war. Donald Trump said he would not allow China to overtake the United States while he was in office. If Hillary Clinton won in 2016, the castling took place during her tenure in power. The policy of protectionism causes a serious blow to the GDP of the Middle Kingdom, which already this year can slow down to less than 6%. The last time such figures occurred three decades ago.

Despite the fact that oil is not yet an object on which tariffs are charged, China has reduced its imports from the United States. About 24% of US exports went to the Middle Kingdom In March 2018 and then, the figure dropped to 4% in March 2019. Donald Trump said he would not allow China to overtake the United States while he was in office. If Hillary Clinton won in 2016, the castling took place during her tenure in power. The policy of protectionism causes a serious blow to the GDP of the Middle Kingdom, which already can slow down to less than 6% this year. The last time such figures occurred was three decades ago.

Technically, Brent continues to form a consolidation range of $ 68.6-74.5 per barrel in the Splash and Shelf pattern on the daily chart. Breaking through its upper boundary will create prerequisites for the realization of target by 161.8% on AB = CD. On the contrary, a successful assault of $68.6 support will open to the bears the way to a decline in the direction of the target by 88.6% based on the Bat model.

Brent daily chart