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Oil rose on Monday, with Brent touching the highest in five months, underpinned by a 30% cut in Abu Dhabi crude supplies and encouraging Chinese data even as global demand struggles to return to pre-COVID levels in a well supplied market.
Brent crude futures for November advanced to $46.38 a barrel earlier, the highest since March, and was fetching $46.27 by 0656 GMT, up 46 cents, or 1%. U.S. West Texas Intermediate crude was at $43.25 a barrel, up 28 cents, or 0.7%.
Brent is set to close out August with a fifth successive monthly price rise while WTI is on track for a fourth monthly gain, having hit a five-month high of $43.78 a barrel on Aug. 26 when Hurricane Laura struck. Energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm.
Abu Dhabi National Oil Company told its customers on Monday that it will reduce October supplies by 30%, up from a 5% cut in September, as directed by the United Arab Emirates government to meet its commitment on the recent OPEC+ agreement.
Reflecting concerns about rising supplies and sluggish global economic recovery, hedge funds and money managers cut bullish wagers on U.S. crude to the lowest level in nearly four months, data showed on Friday. Higher oil and gas prices are also encouraging U.S. producers to resume drilling as the country’s oil and gas rig count rose by three to 254 in August, according to data from energy services firm Baker Hughes Co.
A weak U.S. dollar and a survey on Monday showing surprisingly strength in China’s services sector supported oil prices even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain ample, analysts say, cautioning of hurdles for crude going forward.
On the technical front, the RSI is at 63.64% and suggests that the market can move in the downward direction. The current price is trading around all the moving averages. The stochastic is forming an upside crossover.
Overall Bias is positive and Short-term buy trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion–BUY Brent Crude Oil Futures at 46.05 Take Profit at 47.57 Stop Loss at 44.98