Oil today is constrained in a narrow range, reacting poorly to the publication of the API weekly report according to which last week US oil reserves grew by 1.1 million barrels. Later today, the weekly report of the Ministry of Energy will be published. Experts predict a decline in stocks of almost 0.5 million barrels.
US Treasury Secretary Stephen Mnuchin's recent statement has also influenced the oil market in a negative way. According to the statement, the United States will not cancel the previously introduced trade restrictions on Chinese imports until the completion of the second phase of negotiations. According to its sources, Bloomberg reports that negotiations on the second stage can begin only after the US presidential election in November.
Most likely, in 2020 the situation with international trade will remain difficult. Therefore, energy demand will remain weak.
Within the daily framework, the main attention should be focused on the level of 57.80. As long as the price is kept above this mark, the probability of the development of the correctional movement in the direction of the levels of 59.00 and 60.00 remains. In turn, in case of a breakdown of this level, we will receive confirmation of the development of the scenario with a decrease in quotations down to 56.70.
The main scenario - a breakdown of support at the level of 57.80 and a decline towards 56.70.
An alternative scenario - a consolidation above the level of 57.80 and growth towards 59.00.
The fundamental outlook is moderately negative. There are no reversal signals on the chart, therefore, we give priority to the shorts starting at 59.00.
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