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Oil continued downward movement amid falling stock indices

On Tuesday, oil prices in Asia declined due to concerns of lower demand amid an outbreak of coronavirus. The decrease in quotations occurs against the background of news about a decrease in the number of newly detected cases of virus infection. For the first time since January, the number of people infected per day did not exceed the mark of 2 thousand people. But health experts say it's too early to draw conclusions about the changing situation with the virus.

 

A bearish signal for the market was the announcement of Apple Inc. regarding the fact that revenue in the 1st quarter of 2020 will be lower than forecasted due to lower production and demand for products in China. Most likely, other large companies that do business in China will announce the failure to meet the targets for revenue and production in the near future.

 

A moderate support factor for the market may be reports of the blockade of ports and oil fields by supporters of General Khalifa Haftar. Libyan National Oil Corporation, NOC, stated that production now stands at 0.136 million barrels per day, against 1.2 million barrels. before the blockade.

 

Regarding the chart, we note an unsuccessful attempt by buyers to gain a foothold above 52.00. This is a bearish signal within which we can expect the development of a downward movement towards the level of 50.50.

 

Resistance levels: 52.00, 53.10, 54.00.

 

Support levels: 50.50, 49.30, 49.00.

 

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 are locally prevailing on the chart, therefore we are focusing on shorts from the level of 52.00.

 

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