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Oil rises in price amid the weakening trading risks

Oil prices maintain an upward movement amid the weakening trading risks. Recently, the United States and China officially confirmed the completion of the first phase of trade negotiations, after which the parties plan to sign an interim foreign trade agreement early next month. Investors hope that the abolition of previously imposed trade restrictions will help improve the situation in international trade, restore the global economy and increase demand for energy resources.

 

Mid-term support for oil prices is also provided by the OPEC + decision to reduce the oil production quotas. Based on this decision, JP Morgan had recently made an announcement of revising its forecasts for oil prices. The forecast for Brent for 2020 is $ 64.5, compared to the level of $59 which was expected earlier. In 2021, quotes are expected to decline towards $61.5. According to WTI, in 2020 prices are expected to reach the price point of $60 and $57.50 in 2021. JP Morgan believes that in 2020 there will be a supply deficit of 0.2 million barrels per day in contradiction with the 0.6 million barrel surplus in September of this year.

 

Regarding the chart, the bulls reached the main target of 60.00. Meanwhile, we do not see a strong price reaction, therefore, during today's trading session, we are expecting a breakdown of this mark and  a further upward movement towards the level of 62.05.

 

  • Resistance levels: 60.00, 62.05, 64.00;

 

  • Support levels: 59.10, 57.65, 56.70.

 

The main scenario - a breakdown of resistance at the level of 60.00 and a further increase towards 62.05.

 

An alternative scenario - a consolidation in the range of 59.10-60.00.

 

The fundamental outlook is positive. Bullish signals prevail on the chart. We consider longs from the level of 59.70.

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