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BRENT CRUDE OIL FUNDAMENTAL BACKDROP
Brent crude recovered slightly in early trade after yesterday’s data on API crude oil inventories unexpectedly fell, reflecting a 448 Mbbls (EST: 117 Mbbls) drop in U.S. inventories. Looking back at the CoT report below, we can see that open interest in Brent has risen slightly after hitting a 2015 low – largely due to the market’s cautious approach to oil forecasts. This has a lot to do with the current geopolitical situation originating in Russia/Ukraine, exacerbated by the current easing of global growth concerns, and with other factors such as the Iran nuclear deal complicating future prospects.
Brent Crude Oil Futures Commitment for Traders’ Open Interest
Today we look forward to EIA data as well as key US economic data including retail sales (see economic calendar below), but today’s main focus will be the release of the FOMC minutes. Markets are looking for forecasts on whether the Fed will try to ease monetary policy in 2023, or whether it will try to quell the “centre of gravity” talk and maintain interest rate hikes. Currency markets are currently leaning towards an accommodative narrative, and if the FOMC pulls out, the dollar is likely to find some buying and negatively impact Brent prices.
ECONOMIC CALENDAR
TECHNICAL ANALYSIS
BRENT CRUDE (LCOc1) DAILY CHART
Price action on the daily chart of Brent crude above has seen short-term support at 91.79 (38.2% Fibonacci) above a 6-month low. If the bears manage to break below, a key level lower could be triggered.
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