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Oil market starts the trading week in the red zone

Oil market starts the trading week in the red zone. Pressure on the price is still exerted by an imbalance in favor of excess supply, as well as concerns related to the start of a new wave of coronavirus in the world.

In recent weeks, some countries have begun to gradually ease quarantine measures, which helped restore energy demand. Investors hoped for market balancing by reducing production volumes from OPEC + and the United States. According to Baker Hughes data on Friday, the number of active drilling rigs in the US for the week fell by 74 units. The total number of active rigs has reached its lowest level since 1940. But now the market is worried about signs of the start of the second wave of coronavirus in northeast China and South Korea. Therefore, hopes for a recovery in energy demand may not come true.

Goldman Sachs experts still predict low energy demand throughout 2020 due to concerns about the start of a new wave of the pandemic. Only a slight increase in the number of personal and corporate trips is expected.

Regarding the chart, trading takes place in a narrow range formed below the mark of 25.50. While the bulls cannot overcome this level, the scenario with a downward movement towards the level of 23.20 remains a priority.

  • Resistance levels: 25.50, 26.90, 30.30.
  • Support levels: 23.20, 21.50, 19.50.

The main scenario - a decline towards 23.20.

An alternative scenario - a consolidation above 25.50 and growth towards 26.90.

The current fundamental outlook is moderately negative. We prioritize sales. Entry points should be sought near the level of 25.50.

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