The oil has been growing in price today. Since the beginning of the day, the price of WTI and Brent has grown by more than 1%. The main indexes are traded in the green zone which drives oil growth. But investors remain cautious amid negative news from China, where more than 1,000 people have already died from the coronavirus.
Many experts believe that recovery will be weak and short-lived, as energy demand in China is likely to remain low in the near future due to the deadly virus epidemic. So far, the Chinese authorities have been unable to localize the infection. OPEC+ and Russia cannot yet develop an agreed action plan to reduce production and stabilize the market situation.
Weekly data from the USA, according to which investors expect an increase in oil reserves by 2.9 million barrels, may also become a constraining factor for the market.
Brazilian production record of 3 million barrels per day also has a negative impact on the market. Despite the over-supply in the global market, Brazil continues to further increase energy supplies.
Regarding the chart, we closely monitor the level of 50.50. While the price remains below the priority level, the downward movement scenario and the update of the local minimum at 49.30 remain relevant. With the breakdown of the mark of 50.50, we are expecting a deeper pullback towards 51.25.
Resistance Levels: 50.50, 51.25, 52.00
Support levels: 49.30, 48.90, 48.50.
The main scenario - a breakdown of support at the level of 49.30 and a decline towards 48.90.
An alternative scenario - a breakdown of resistance at the level of 50.50 and an increase towards 51.25.
The fundamental outlook is moderately negative. We consider shorts at 50.50 and 51.25.
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