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Oil price rises due to the conflict escalation in the Middle East

The oil market is within an upward trend on Monday due to the news from Libya. Libyan State Oil Company "National Oil Corp." reported the day before that the army of General Khalifa Haftar had blocked the main pipeline. As a result, production at the largest fields in Libya, Sharara and El Fil was almost completely suspended. Long interruptions in energy supplies from Libya could cause a change in the balance in the oil market and its shift from excess supply to deficit in the first quarter of 2020.

 

Additional support to the market is provided by news from Iraq, where oil production at a number of large fields was also suspended due to ongoing riots. The tense situation in the Middle East is now a major factor in rising oil prices.

 

On the graph we observe a rather interesting situation. Despite a significant support from the fundamental factors, the price could not gain a foothold above the level of 59.00. A bearish correctional wave is developing now, within which we can expect a decline towards the level of 58.30.

 

  • Resistance levels: 59.00 60.00, 62.50;

 

  • Support levels: 58.30, 57.60, 56.70.

 

The main scenario - a decline towards 58.30.

 

An alternative scenario - a consolidation above the level of 59.00 and further growth towards 60.00.

 

The fundamental outlook is moderately positive. On the graph there are prerequisites for the development of a downward correctional movement. Within the daily framework, we consider shorts from the level of 59.00.

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