By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

On Monday, February 11, Brent crude is trading close to US$61.50 and falling, although bulls were dominating the instrument last Friday.

The number of oil and natural gas rigs active in the US added 4 units over a week by February 8, up to 1,049. In Canada, the same indicator lost 3 units and now equals 240. After Baker Hughes published these numbers last Friday, oil prices were still rising slowly, although they had to fall given the rather bearish readings.

Speculation in the oil market drove the price upward last week, as the US Congress has plans to review a draft law allowing the US to accuse other member countries of OPEC of manipulating oil prices. The idea is not new, as Congress has discussed it in the past in one form or another, but this time this law has more chances to be approved. It’s no secret that President Donald Trump is very aggressive when it comes to OPEC.

So, what may Congress really do? In case it is really necessary, Congress may deprive OPEC members of sovereign immunity, thus making them vulnerable to accusations in different conspiracies. This is what makes oil prices go up.

As we can see in the H4 chart, the mid-term tendency is still moving upwards, while the short-term one is trying to go in the opposite direction. The short-term tendency is confirmed by the divergence on MACD, which may indicate the start of a new bearish phase. The closest downside target will be the support line of the mid-term trend at US$60.20. If the price breaks this level, the descending tendency may continue to reach the next target at US$58.55 (38.2% Fibonacci retracement). At the same time, the instrument may yet break the local resistance at US$62.55 and continue growing towards the mid-term one at US$64.20.

In the H1 chart, the price is steadily trading downwards, but there is a convergence on the Stochastic Oscillator. In this light, the price may break the resistance line at US$62.55.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.