The situation on the oil market is gradually stabilizing on Tuesday, after the historic decline of WTI.
On Monday, the May futures price for WTI crude on NYMEX fell by more than 300% and reached $ -40.32 per barrel. The price of June futures fell by more than 18%. According to experts, this extraordinary event indicates a complete lack of demand for oil. Hopes for a quick recovery of the global economy are dying away, while the main energy consumers have almost filled up the available storage reserves. At the same time, the volume of supply from OPEC and non-cartel countries continues to grow, since the previously reached OPEC + agreement will only begin to operate in May.
Considering the above, today the media reported that Saudi Arabia is considering the possibility of an immediate reduction in production and compliance with the terms of the OPEC + agreement. It is reported that other OPEC countries support this idea, but the possibility of reducing supply may be limited by existing contracts. Experts say that even these measures will not be enough to stabilize the market.
In response to the current situation, Donald Trump stated that in the near future the administration will consider the complete cessation of oil purchases from Saudi Arabia to support the national oil production sector. At the same time, commenting on the drop in prices on the market yesterday, Trump noted that the United States will definitely take advantage of the reduced oil prices to fill reserve storage facilities.
The chart is still dominated by bearish signals. The price tested the level of 20.35 yesterday. Today sellers are building up pressure, so with a high probability we can expect a decline in quotations towards the level of 20.00.
The main scenario - a breakdown of support at the level of 20.35 and the further development of the bearish trend.
An alternative scenario - a false breakdown of the level of 20.35 and an increase towards 23.20.
The current fundamental outlook is negative. We still prioritize shorts. Entry points are to be sought at the levels of 22.10 and 23.20.
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