Traders are looking for international-benchmark Brent crude to open anywhere from $5.00 to $10.00 higher on Sunday after drone strikes on facilities in Abqaig and Khurais eliminated 5.7 million barrels of production over the weekend. After earlier estimates that the Saudi’s had lost about 50% of their production, officials now believe that they can restore 2 million barrels by the end of the day Monday.
On Friday, December Brent crude oil settled at $59.25, down $0.21 or -0.35%.
The next several days are likely to be very volatile because we’re going to see a mix of aggressive short-covering by traders who increased bets last week on lower demand and increased supply, and aggressive speculative buyers looking for a prolonged supply disruption.
We could see as much as a $10.00 higher opening on Sunday, or we could see a $5.00 higher opening and a gradual move higher or lower depending on how quickly officials are able to restart oil production.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum shifted to the downside late last week. Taking out the last main top at $62.77 will signal a resumption of the uptrend.
A $5.00 higher opening will take out $64.45 and put the market in a position to challenge the July 11 top at $66.50.
A $10.00 higher opening will put the market in a positon to challenge the May 16 top at $69.93, followed by the April 25 main top at $71.87.
The major range is formed by the October 3, 2018 main top at $81.86 and the December 26, 2018 main bottom at $52.19. Its 50% to 61.8% retracement zone is $67.02 to $70.53.
The current main range is $71.87 to $55.29. Its retracement zone at $63.58 to $65.54 is likely to act as both resistance and support on Monday.
Daily Swing Chart Technical Forecast
We’re likely to be in a momentum driven market from the opening today so main tops and retracement zone levels are not likely to be that important initially in the session. Once the markets calm down and traders learn more about the timing of the repairs then traders will become more concerned over support and resistance.
This article was originally posted on FX Empire
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