Crude Oil Back to Correction

On March 2nd, the first trading session of the spring, Brent is correcting upwards after plummeting the week before. On Monday morning, the instrument is trading at 51.25 USD with the last week’s lows being at 48.50 USD.

Another thing that supports oil prices is Saudi Arabia’s intention to cut its oil extraction by 1 million barrels per day in addition to already existing restrictions from OPEC+ agreement. The reason lies in the risks of the coronavirus outbreak and a possible decrease in global demand for energy commodities.

This week, OPEC+ is scheduled to have a meeting, where the carte has to decide on daily extraction limits. It may help the commodity market reach stability.

Nevertheless, the Chinese coronavirus remains the topical issue among market players, because its influence on the global economy and its stability is still pretty unclear.

As we can see in the H4 chart, after breaking 54.26, Brent has reached the short-term target at 49.50 and may continue the fifth descending wave towards 48.20; right now, it is moving upwards. Possibly, the pair may correct towards 53.90 and then start a new decline to reach 48.50. After that, the instrument may form a reversal pattern for another growth with the first upside target at 59.80. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving directly upwards after leaving the histogram area. The indicator is expected to grow towards 0. After the line breaks 0 to the upside, the price may boost its ascending movement.

In the H1 chart, Brent has completed the first ascending impulse with the target at 51.80. The main scenario implies that the pair may correct this impulse to reach 50.50 and then form another rising structure towards 53.90. Later, the price may resume falling to return to 50.05. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: after breaking 80, its signal line is moving towards 50. If the indicator breaks the latter level, the price may fall to reach 48.50 without forming any ascending structures.