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Oil prices remain under pressure

On Monday, oil prices are pressured due to negative news about the dangerous coronavirus spread. According to recent data, the number of cases in China has exceeded 17 thousand people with 361 lethal cases.

 

In January, Brent crude oil prices declined by more than 14%. This is the biggest price drop since November 2018. According to the results of January, WTI crude oil fell by almost 16%.

 

The fall in prices is based on the growing fears regarding a decrease in energy demand from the largest world consumer - China. Due to the outbreak of the deadly virus, the world's second largest economy has virtually stopped.

 

Due to the coronavirus epidemic, the world's largest airlines have suspended flights to China. As a result, the cost of aviation fuel in Asia has shown the largest monthly decline in ten years. According to Refinitiv Eikon, the cost of jet fuel fell by 34%.

 

According to Reuters, the OPEC+ countries will hold a meeting of the technical committee to discuss issues of extending the agreement to limit production and the possibility of reducing quotas for oil production.

 

The bearish trend still prevails on the chart in the medium term. The price is constrained near the August low - 50.25. It is very probable that we will see updates of this level in the upcoming days.

 

Resistance Levels: 53.10, 54.00, 55.50.

 

Support levels: 50.99, 50.25, 49.75.

 

The main scenario - an increase towards the level of 52.00 and a decrease to 49.75.

 

An alternative scenario - a decline towards 49.75 from the current levels.

 

The fundamental outlook is negative. The chart is dominated by bearish signals. Within the daily framework, we consider shorts near the level of 52.00.

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