On Monday, oil continues to fall in price amid declining tensions in the Middle East and pending of the interim trade agreement between the US and China.
Last week, the crude oil price index showed a fall in prices of 6.4%, which was the strongest decline of this indicator over the past six months.
In the coming days, the focus of the market will be set on the news related to the signing of an interim foreign trade agreement between the United States and China. Today, Chinese Deputy Prime Minister Liu He to pay an official visit to Washington, where a trade agreement is expected to be signed on January 15th. Investors hope for an improvement of the situation in world trade and an increasing demand for energy. Therefore, in the middle of the week, the oil market may receive significant support.
Today, major stock indexes are traded in the green zone. Oil is also among the risky assets, therefore, despite the prevalence of bearish signals on the chart, the potential for decrease of oil prices will remain low.
Within the daily framework, the main reference today will be the level of 58.50. While the price is kept above this mark, the scenario with the development of a correctional wave in the direction of the level of 60.00 is more likely to work out. In case of a breakdown at the level of 58.50, we should expect a development of a bearish wave towards the level of 57.80.
The main scenario - growth towards 60.00
An alternative scenario - a breakdown of support at the level of 58.50 and a decline towards 57.80.
The fundamental outlook is neutral. We consider short-term longs with very moderate risks from the level of 58.50.
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