Oil Has Recovered

Early in October, the oil market is actively recovering. Some external fears have already been included in prices and market players are slowly calming down about all risk factors, such as new COVID-19 cases in the world, the fact that US President Donald Trump and his family have the coronavirus, and a slump in demand for energy resources amid the unbalanced recovery of the global economy.
 
As a result, on Monday, October 5th, Brent is trading at $40.05. At the same time, opportunities for explosive growth are quite limited: the global negative didn’t go anywhere, everybody just got used to it.
 
The statistics from Baker Hughes seem quite interesting. The Oil/Gas Rig Count added/lost 6 and 1 unit and are now equal to 189/266 units respectively. After more than a year of decline, where does this optimism come from? Probably, it is somehow connected to the expansion of oil delivery from the USA to China within the framework of Phase I of the US-Sino trade agreement. In addition to that, the hurricane season in the Gulf of Mexico is over and almost all oil producers in this region resumed full-time operations.
 
In the H4 chart, after finishing the descending correctional wave at 39.00 and forming a new consolidation range above this level, Brent has broken it to the upside and may continue growing towards 40.60. After that, the instrument may correct to break the descending channel at 39.80 and then start a new growth with the target at 42.80. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving near the lows and may break the histogram area. After that, the line is expected to grow towards 0. If the line breaks this level to the upside, it may boost the ascending impulse on the price chart.
 

 
As we can see in the H1 chart, after reaching the target at 39.00 and then completing the rising impulse to reach 40.00 along with the correction towards 39.20, Brent has finished the second rising impulse; right now, it is correcting to reach 39.80. Later, the market may start a new growth with the first target at 40.60 and then resume falling to return to 39.80. From the technical point of view, this idea is confirmed by Stochastic Oscillator: its signal line is falling towards 50. After that, the line is expected to reverse and grow to reach 80.
 


Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
 
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.