Commodity market movements attract a lot of attention this week. A barrel of Brent has reached the highs of April 2015 right after they published the news about shutdown of the Fortis pipeline system due a crack. The crack was found a week before, but Ineos, the company that operated and maintained the system, assumed they would be able to eliminate the spillage by reducing pressure. However, this plan didn’t work and the pipeline had to be closed for maintenance.
No one knows how much time the procedure is going to take. May be a week. May be two or three.
Why did this information set off such enormous reaction throughout the whole commodity market? Suspension of the pipeline that carries crude oil to the terminal in Cruden Bay, Scotland, will suspend the oil extraction process as well on more than 80 platforms in the North Sea. Several northern countries, which get the oil from there, will have to replace it with their reserves or buy it somewhere else. However, stock exchange prices for the oil will remain high until they exclude this factor from price quotations.
In this light, updated reports on the crude oil inventories and natural gas storage to be published by the API and the US Department of Energy this week are unlikely to attract a lot of attention from investors. As long as such speculative driver remains in effect, other drivers will be completely ignored.
The long-term trend is still bullish. After a slight sideways correction, the price has broken previous highs and reached new ones. The rising channel at the daily chart is looking stable. The main targets of the current uptrend will be the resistance levels of the current channel at 69.00 and 70.75. The support level is at 62.15.
From the technical point of view, the H1 chart shows that the short-term channel has been broken to the upside, which means that the tendency may continue faster. The main short-term target is the upside border of the projected channel at 66.80. The support level for the current movement is at 64.50.
Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
