On Tuesday, oil prices increased by more than 5%, after the strongest one-day decline in the last 30 years. A positive impact on oil prices was exerted by expectations related to the stimulation measures from the largest economies in the world.
President Donald Trump stated the day before that he would take new steps to protect the US economy from the coronavirus epidemic. On Tuesday, Trump will discuss the possibility of lowering the payroll tax and allocating additional funding for the compensation program for time-based workers with the Congress. Moreover, the Japanese government plans to spend more than $ 4 billion on a second stimulus package to deal with the consequences of the epidemic.
The statements of some experts that the conflict between the largest oil producers will be able to resolve quickly enough have a positive impact on the market. Saudi Arabia, other Middle Eastern countries and Russia have significant budgetary constraints. Shale oil producers in the US and Canada remain profitable at an oil price of $ 50 or more. The parties will be forced to sit at the negotiating table if oil prices are kept at a low level.
Despite the local growth, bearish signals still prevail on the chart. As part of the corrective movement, the bulls could not overcome the resistance at the level of 33.80. Therefore, today we are expecting a downward movement development towards the level of 30.50.
The main scenario - a decline towards 30.50.
An alternative scenario - a breakdown of resistance at the level of 33.80 and the development of corrective movement.
The fundamental outlook is neutral. We consider shorts from the level of 33.80
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