Crude Ready to Go Higher

Friday report revealed that the oil rig count in the US had grown by 11 by Jan 26, to reach 946. The YoY growth is at 235. In Canada, 13 rigs had been added, with the total count at 338. Shale oil companies in Canada has been very active lately, January is a good month for them.

Despite the totally bearish stats, Brent crude went above $70. It looks like the oil market is more sensitive to the dollar than to the fundamentals. Being that, the greenback is rather neutral early this week, as the market players had to pay a dear price for the volatility last week. The investors are likely to save their energy and wait for a new important event that would provoke another move.

There’s another important thing the capital and commodity markets may become very sensitive to, and these are geopolitical events. The US may announce toughening of the sanctions against Russia, and the market reaction will very much depend on how tough these sanctions will be. In case the Russian bonds are not banned, the sanctions are unlikely to shock the investors. If Washington goes ‘all in’, though, the markets may become very much volatile, and the crude oil might go up even further. This means Brent crude may even reach $71 and $72.

Technically, Brent is steadily rising within a long-term channel; the price, however, has tested the resistance, which could mean a pullback or even a reversal. Speaking mid-term, the major downside target may be at $58.50, which was previously a support that then became a resistance.

Short term, Brent is still uptrending, but the next target may well be at $67 (the support), while the black gold can still rise up to $76.40 to reach the resistance, too.

A pullback to $67 could be a test of both the short-term and the long-term support. Once the support gets broken out, the price will enter the projection channel at $62.80, and this could influence the investors’ decision on buying or holding their positions.

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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.