Oil is approaching overbought levels

Arseniy Dadashev, AUFI 16 September 2021 13:23

Oil accelerated the rally on Wednesday, for the first time since mid-July, exceeding the $76 per barrel mark and gaining about 2.5% during the day. The quotes partially rolled back to the close, but remained in a good plus. Today, during morning trading, Brent returned to growth, which was leveled by the beginning of the European session, which casts doubt on further ascent in the short term.

The black gold market benefited from yesterday's retreat of the dollar, which declined across the entire spectrum of the market, playing off weak data on American inflation. Industry statistics also played into the hands of oil futures. The Ministry of Energy reported a drop in crude oil reserves by 6.4 million barrels per day at the end of last week. Moreover, gasoline reserves decreased by almost 2 million barrels.

From a technical point of view, the bullish potential of Brent may run out in the near future against the background of a brewing local overbought. In addition, the dollar began to win back yesterday's losses and does it very vigorously, which during the day can not only restrain further growth, but also provoke a correction, especially since at current levels oil looks attractive for profit-taking.

In this scenario, the primary support is expected to be around $75.20 per barrel, and after the loss of the $75 mark, Brent will head to the $74.30 zone.

Arseniy Dadashev, Director of the Academy of Financial Management and Investment

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