Sluggish Demand Puts Pressure On Oil

On Monday, Jan. 18, Brent continues moving to the downside; the asset is trading at $54.60 amid the oil demand contraction in Europe and a new round of the COVID-related concerns.
 
According to Bloomberg, the car fuel demand and the road traffic in Europe dropped to their lows since June 2020 due to lockdowns in major economies, which were aimed at reducing the pandemic influence and the coronavirus attack rate. In part, these factors may reach stability a little bit during the cold winter in Europe this year, when households’ needs in energies increase but it’s a local driver.
 
As opposed to them, a threat of the economic slump due to the coronavirus is quite real and long-term, that’s why prices are going down.
 
The latest data from Baker Hughes showed that the Rig Count in the USA added 13 units over the week and now equals 373. The indicator has been growing for the eighth consecutive week and that’s another reason to sell oil.
 
In the H4 chart, after reaching the short-term upside target at 57.00 and then the predicted correctional target at 54.66, Brent is expected to consolidate above the latter level. Later, the market may break this range to the upside and forming one more ascending wave with the target at 58.50. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is approaching 0 and may later rebound from to resume moving to the upside.

As we can see in the H1 chart, after completing the descending wave at 54.66, Brent is expected to grow to break 55.50 and then continue trading upwards with the first target at 56.50. Later, the market may correct to return to 55.50 and then resume moving within the uptrend to reach 58.50. From the technical point of view, this idea is confirmed by Stochastic Oscillator: its signal line is moving to rebound from 20, which means that the market may reverse to the upside to start a new growth towards 50. After that, the line may break this level as well, thus leading to further uptrend on the price chart.

Disclaimer: Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.