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Oil could drop below 70 USD per barrel

Today, the cost of a barrel of Brent oil has dropped to 71.31 USD, which was last seen in April this year. The driver behind this decline was yesterday’s API weekly crude oil stock report, according to which US oil reserves have increased by 629k barrels. Black gold is currently trading around the 76.4 Fibo level for 71.9 USD per barrel. The price is testing the lower boundary of the uptrend (daily timeframe), which started in June 2017. The closest support is at the 71.05 USD mark, where we can see a morning star doji formation, which shows a continuation of the uptrend after the bearish candlestick from the 17th of April, 2018. The closest resistance is located at 78.97 USD. In my opinion, oil will continue to test the 76.4 Fibo level (71.97 USD per barrel) for the rest of the week. If we get a breakout of the local support, oil prices will most likely drop to the 61.8 Fibo level at 66.75 USD per barrel. If the test of the 76.4 Fibo (71.97 USD) fails, we may see oil prices start to increase again. However, will all this in mind; we still need to account for geopolitical factors, which have a profound effect on the volatility of oil prices.

 


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