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Oil market starts trading week in the red zone

On Monday, oil prices are moving down due to rising concerns regarding the growing volumes of free reserves in oil storage facilities.

 

Oil reserves in the United States rose to 518.6 million barrels, which is close to a historic maximum of 535 million barrels which was set in 2017. Investors fear that major oil producers will not be able to quickly and dramatically reduce production to stabilize the market.

A similar situation can be observed on the side of other large energy consumers. For example, Indian backup storage was 95% full last week. In Singapore, fuel inventories rose to a four-year high, amid a 60% decline in processing plant capacity.

 

Baker Hughes data released on Friday indicated that the number of active drilling rigs in the US decreased from 529 to 465 units, which is the lowest indicator since July 2016. The total number of oil and gas rigs in Canada has fallen to its lowest level since 2000.

 

OPEC + countries will begin massive cuts  in production in May.

 

Regarding the chart, the bears pushed support at the level of 17.00. This maneuver opens the way for a further decline in quotations towards the level of 15.00.

 

  • Resistance levels: 17.00, 19.00, 20.35.

 

  • Support levels: 15.00, 11.50, 10.00.

 

The main scenario - a decline towards 15.00.

 

An alternative scenario - a return to the level of 17.00 and growth towards 19.00.

 

The current fundamental outlook is moderately negative. Shorts remain a priority. Entry points are to be sought after around the level of 17.00.

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