Market Overview

Brent Oil - Indecision On Weekly Chart, Higher Lows On Daily


Friday's solid recovery from the low of $56.38 helped Brent Oil end the week on a flat note at $57.72 levels. The upside was capped at $58.29 last week.

Major news/data

  • US rig count drop - Baker Hughes A GE Co (NYSE: BHI) data released on Friday showed that the Oil rig counts in the US fell by 7 to 736 in the week to Oct. 20, the lowest level since June. Natural gas rigs fell by 8. The industry has shed 32 Oil rigs in the last ten weeks. The total Oil rig count now stands at 293. The drop in the rig count could put a bid under Oil benchmarks.
  • Saudi satisfied with the oil market recovery - "The Saudi Kingdom is satisfied with the orientation of the global Oil market towards recovery as a result of a deal to boost prices by limiting production", says a Reuters report.
  • Geopolitical concerns - The threat of possible supply disruptions in the Kurdish region of Iraq is also keeping the Oil prices well bid
  • The crude market may be underestimating China’s Oil demand - Bloomberg

Despite the bullish news flow, Oil prices are struggling to capitalize on Friday's sharp rally. The charts indicate conflicting price patterns.

Weekly chart - Risk of bearish doji reversal

  • Last week's Doji candle has poured cold water over the previous week's sharp rally from the low of $54.96 and indicates indecision in the market.
  • A red candle this week would confirm 'bearish doji reversal' and would mean the rally from the June low of $44.54.
  • Prices could then proceed to test the weekly 50-MA stationed at $53.20.

Daily chart - Higher lows

    • The higher lows pattern is represented by rising trend lines (blue and black).
    • A break above $58.29 (Oct 16 high) would add credence to Friday's sharp recovery from $56.38 and shall open doors for a test of supply around $60.00 levels.

    View - It's a wait and watch game

    • A bearish follow-through to last week's doji candle would open doors for a move lower to $54.88 (May 25 high) and $52.77 (200-DMA).
    • On the higher side, a break above $58.29 could see Oil rally to $60.00.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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