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Oil drops in price to a 17-year minimum

Oil continues to decline in price reaching a 17-year minimum.

 

The reasons for the decline in oil prices remain the same. Amid the coronavirus pandemic, the global economy continues to slow down. Demand for energy is falling. At the same time, the largest oil producers continue to increase production, increasing the imbalance in the direction of excess of oil supply. Many experts predict a decline in oil prices to $ 18-20, in the event of a geometric increase in the number of patients with coronavirus in the United States and other regions of the world.

 

The efforts undertaken by governments to stabilize the global economy so far cannot change the market situation. According to Goldman Sachs, energy consumption has declined by 8 million barrels in recent months per day. Experts predict a decrease in this indicator in the 2nd quarter to 20 million barrels per day. At the same time, Saudi Arabia is going to put a record 10 million barrels per day on the market starting in April, increasing total production up to 12 million barrels per day.

 

Today, investors should follow the publication of the US Department of Energy weekly report. An increase in reserves of 3.3 million barrels is expected.

 

Regarding the chart, trading is now below the mark of 27.00. If the bears manage to gain a foothold below this mark in the near future we will see continued movement in the direction of the level of 25.00.

 

  • Resistance levels: 27.00, 30.30, 31.50.

 

  • Support levels: 25.00, 23.00, 20.00.

 

The main scenario - a consolidation below the level of 27.00 and movement towards 25.00.

 

An alternative scenario - consolidation above the level of 27.00 and growth towards 30.30.

 

The fundamental outlook is negative. We consider shorts from levels of 27.20 and 30.30.

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