After a slight correction, oil prices resumed their downward movement amid fears of an increasing imbalance between supply and demand in the oil market. On Tuesday evening, the American Petroleum Institute API reported a sharp 10.5 mn barrel increase in reserves, much higher than the +4 mn barrel forecast.
Bearish sentiment in the market is getting stronger with growing disagreements within OPEC. On Tuesday Saudi Arabia and other cartel countries could not come to an agreement to hold a new meeting in April to stabilize the market situation.
Reuters sources report that the White House has so far postponed indefinitely the proposal to establish an alliance with Saudi Arabia to manage the global oil market. The agency also conducted a survey of 40 analysts, who believe that the average cost of Brent in 2020 will be 38.76 dollars per barrel. According to the February poll, the average Brent price was projected at $60.63.
Today, the market will focus on the weekly data of the US Department of Energy on oil reserves. Experts forecast growth of almost 4 million barrels. API data support the probability of a weaker report. The trading may also be affected by PMI data for the production sector in Europe and the United States.
The bulls yesterday failed to overcome the resistance at 23.20. The price resumed its downward movement. Accordingly, today we expect the break-down of the support at 21.30 and the decline of the quotes at 20.35.
The main scenario is the break-down of support at 21.30 and decline at 20.35.
Alternative scenario is a break-down of the resistance at 23.20 and a rise towards 25.75.
Fundamental background is negative. Bearish signals prevail on the chart, so we consider the instrument intraday sales. We are looking for entry points near the level of 23.20.
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