OIL VOLATILITY EXPECTED FOLLOWING US INVENTORIES DATA

Oil traders are waiting for the release of US oil inventories data at 14:30 GMT and are reluctant to build up new positions. Currently the price of American crude oil benchmark – WTI is consolidating near the level of 43.50. The reason for the sharp decline in prices yesterday was due to the increase of oil production in Libya and Nigeria which are free from obligations on the oil production cut agreement. As a result, the output volume in Libya reached 885 thousand barrels per day and Nigeria plans to export 226 thousand barrels of Bonny Light oil compared to 164 thousand barrels in July.

The price increase will be restrained by the resistance at 44.25 and the upper limit of the descending channel. The quotes reached the SMA100 on the 15 minute chart that may stimulate the resumption of the downward movement within the channel. In this case, the next target levels will become 43.00 and 42.20. After the end of ongoing consolidation, we are likely to see an increase in volatility, and the trigger for its growth may come from the US oil inventories data.

Currently we do not see fundamental factors that will be able to offset the imbalance between supply and demand on oil quotations.