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Crude Oil Looking for Correction

The US supported by the UK and France carried out its missile strikes against the targets where the supposed chemical weapons might have been produced. This was highly expected in the markets, and once it happened the prices went down.

Thus, Brent crude is trading at $71.50 today, against the last week high at $73.09. Another bear signal came from Baker Hughes with their US and Canada rig count report. By Apr 13, the rig count in the US increased by 7 over the week to reach 1,008. Although it got a bit lower in Canada, this is not usually taken much into account, as Canada stats are usually very mixed.

US oil weekly inventory reports remain mixed, too, with the market trying to follow other drivers that do not require too much analysis. This, first and foremost, includes geopolitical events. Syria will be a major market mover for long, and much depends on how Russia will be going to act. The US government may continue supporting tensions verbally, but, overall, this is likely to be put on hold for a while.

As we move forward to the rest of 2018, the question of non-OPEC countries oil production is going to become much more important. There are already some fundamentals pointing to the possible production slowdown in Q3 and Q4, which could lead to lower demand. Even with a small supply increase, this could end up putting the oil price under pressure.

Technically, Brent crude is still uptrending, with the latest growth impulse reaching the current channel resistance. This means the trend is steady enough, and the current downmove is nothing else than correction, with the possible target at $70.00. After the correction is over and a new support is ready, a new upside channel is likely to be formed. A bounce-off against the support may lead to the price going up to the resistance at $72.60. in case it gets broken out, the price may move to the projection resistance at 75.00, which is an important round number.

Brent Oil 4H Chart
Brent Oil 4H Chart

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex

This article was originally posted on FX Empire

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