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Oil is declining due to the news from China and US oil reserves data

Oil resumed its downward movement due to negative news from China and increasing US oil reserves.

Today, Chinese authorities reported that after applying the new diagnostic methodology, 14840 new cases were detected with 242 lethalities. Thus, the number of people infected with the virus in China has exceeded 60 thousand people. In relation to such news, investors expect a further decrease in energy consumption by China. In connection with the suspension of flights to China, the level of demand for aviation fuel continues to fall.

 

The US Department of Energy report was released on Wednesday. It stated that the level of oil reserves increased by 7.5 million barrels, which became the most important bearish Wednesday news. The aforementioned increase is the highest since December 13, 2019.

 

Regarding the chart, having tested the level of 52.00, the price resumed its downward movement. Today we are waiting for the development of a bearish wave and a decline in quotations towards 50.50.

 

Resistance levels: 52.00, 53.10, 54.00.

 

Support levels: 50.50, 49.30, 48.50.

 

The main scenario - a decline towards 50.50.

 

An alternative scenario - a consolidation above the level of 52.00 and growth towards 53.10.

 

The fundamental outlook is moderately negative. Bearish signals still prevail on the chart. Within the daily framework, we consider shorts from the level of 52.00.

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