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Oil market opens trading week with significant decline

On Monday, oil prices fell sharply amid rising concerns about the spread of the coronavirus pandemic. Forecasts on the level of demand for energy carriers are revised downward, while in the price war between Saudi Arabia and Russia there are no signs of weakening so far.

On Friday, representatives of Saudi Arabia said that they are not negotiating with the Russian Federation to stabilize the market situation. In April, supply growth is expected, while many experts predict a reduction in consumption by 15-20% compared to 2019. If in the near future the market situation does not change in a couple of months, the main oil storage facilities will be completely full, which could have a devastating effect on energy costs.

The overall fundamental background in the market remains negative.

The chart is dominated by bearish signals. The price has broken the level of 23.20 and is now moving to the next intermediate support level - 21.30. The probability of a breakdown of this mark is very high. In this case, we should expect an update of the minimum at the level of 20.35.

Resistance levels: 24.15, 25.75, 27.50.

  • Support levels: 21.30, 20.35, 19.75

The main scenario is a breakdown of support at 21.30 and a decline to 19.75.

An alternative scenario is consolidation in the range 21.30-23.20.

The fundamental background is negative. We consider sharts after a retreat to 24.15.

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