Oil is gaining momentum with the increase of bullish forces



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The West Texas Intermediate oil futures are up on Friday and are expected to post a gain for the week despite the release of a second report calling for an overabundance of supply by 2020. Prices suggest that supply concerns go beyond demand concerns.

A tropical storm in the Gulf of Mexico and increased tensions in the Middle East had an impact on supply. Another significant reduction in US inventories also helps to generate positive momentum.

Oil rigs evacuated before the storm

Fifteen production platforms and four rigs have been evacuated in the north-central Gulf of Mexico, according to a US regulator.

According to the latest reports, oil companies in the Gulf of Mexico have reportedly reduced production by more than a million barrels a day, or 53 percent of the region's production, because of tropical storm Barry, which could affect Coast Saturday on the coast of Louisiana. .

Iran creates trouble with Britain

Three Iranian ships have tried to prevent the passage of a British ship managed by BP in the Strait of Hormuz, announced the British government. They withdrew after the warnings of a British warship. Although prices rose in response to this news, the event would have been anticipated after Iran had warned Britain to suffer the "consequences" of seizing an Iranian oil tanker.

The US government reports another important draw

On Wednesday, the US Energy Information Administration (EIA) announced that crude oil inventories fell by 9.5 million barrels in the week to July 5th. Traders were looking for a circulation of 3.1 million barrels. Traders said the decline was due to increased refinery production. This also marked the fourth consecutive weekly decline.

Renewed concern over demand

Keeping a lid on prices are two independent reports calling for lower demand.

OPEC said Thursday that the world would need 29.27 million bpd of crude per year in 2020, a decrease of 1.34 million from this year.

On Friday morning, the International Energy Agency (IEA) is predicting the return of an oversupplied oil market next year, despite the OPEC-led pact aimed at reducing production and stabilize prices.

The IEA said the "main message" of its highly followed report was that oil supply in the first six months of 2019 had exceeded demand by 0.9 million barrels a day.

"This surplus adds to the huge stocks built in the second half of 2018, when oil production rose, as demand began to weaken," said the IEA.

"Clearly, the tighter market is not a problem at the moment and any rebalancing seems to be shifted further into the future."

"The much-awaited decision by OPEC Ministers + to extend their production agreement to March 2020 provides guidance, but that does not change the fundamental prospects of an oversupplied market," he said. l & # 39; IEA.

Technical analysis

Weekly Technical Analysis of September WTI Crude Oil

The main trend is down on the weekly oscillating chart, but the upward trend is intensifying. The main trend will change to go up on a trade at $ 64.02. This is followed closely by another main peak at $ 65.92. An exchange at $ 50.91 will mark the recovery of the downtrend.

The minor trend is up. It has changed to increase earlier this week when buyers hit the high of last week at $ 60.32. This movement has confirmed the momentum on the rise. The slight downward trend will increase to $ 56.13.

The short-term range is $ 44.66 to $ 65.92. Its $ 55.29 to $ 52.78 retracement area is a support.

The main range is $ 74.44 to $ 44.66. Its retracement area of ​​$ 59.55 to $ 63.06 is under test. This zone controls the long-term orientation of the market.

Weekly forecasts

Demand problems are a longer term problem. The potential supply problems associated with the approach of the tropical storm are a real problem in the short term. Therefore, unless weather conditions improve suddenly and production resumes, this story will likely be a determinant of short-term price developments.

Based on this week's price action, the direction of the WTI crude oil market in September next week will likely be determined by operators' reaction at the main level of 50% to $ 59.55.

Bullish scenario

A sustained move of more than $ 59.55 will indicate the presence of buyers. If this movement creates enough momentum, the current rally should extend to the main level of Fibonacci at $ 63.06. This is a potential trigger point for an upward breakout with the next target the two main peaks at $ 64.02 and $ 65.92.

Bearish scenario

A sustained movement of less than $ 59.55 will mark the presence of sellers. If this movement generates enough downward momentum, look for a try again from the minor bottom at $ 56.13. Exiting this level will cause a slowdown. This could lead to a test of $ 55.29 to $ 52.78.

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