Oil Heads Higher

On Monday, May 18th, Brent is moving above $33 and trying to keep its positive momentum. Well, the reasons for aggressive purchases are looking rather “fragile” so far but it seems like investors find them strong enough.

The key catalyst of such a steady growth in oil is the optimism that’s been recently seen when it comes to a possible achievement of a balance between supply and demand on the market in the nearest future. At the same time, many countries are slowly removing quarantine restrictions forced by the Covid-19 pandemic and that’s also perceived by market players as a good sign and a reason to raise demand for commodities later.

Meanwhile, the USA continues to reduce the number of rigs. Over the last week, the number decreased by 35, down to 339 units. When compared to the last year, the indicator lost 648 units, which is a huge number. A smaller number of active rigs in the USA is another thing, which supports oil prices.

In the H4 chart, after forming the consolidation range around 30.38 and then breaking it to the upside, Brent is expected to continue the uptrend towards 38.20, at least, and this growth will be considered as the third structure of the current wave. According to the scenario, the pair may form the first ascending wave with the key target at 45.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: after rebounding from 0 to the upside, its signal line is steadily growing inside the histogram area.



As we can see in the H1 chart, after testing 31.40 from above and rebounding from it, Brent has broken 32.80 and may continue growing towards 34.33. Today, the pair may reach this level and then start a new correction to return to 32.80. After that, the instrument may resume trading upwards with the target at 38.20. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is rebounding from 50 and is expected to grow towards 80.


Disclaimer
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.