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WTI: Saudi Arabia could reduce production to 7.5 million barrels.

On Tuesday, the oil market is constrained in a fairly narrow range. The market receives a large number of positive and negative news, which are now balancing each other's influence.

 

Today, major indices are trading in the red zone amid rising fears associated with the start of the second wave of the COVID-19 pandemic. Oil is also a risky asset, so demand for black gold remains limited. Investors fear a worsening epidemiological and economic situation in the world, which will inevitably have a negative impact on the level of demand for oil

 

Furthermore, statements of Saudi Arabia on a larger reduction in oil production in June targeted at eliminating the oversaturation of the energy market may positively influence the oil market. According to Saudi Arabia, they intend to reduce production in June by another 1 million barrels per day. Thus, the total production level will be reduced to 7.5 million barrels per day, which is 40% below the April maximum. Other OPEC + countries can follow the example of Saudi Arabia. The UAE and Kuwait announced an additional reduction in production by 18 thousand barrels per day.

 

Today, investors expect the publication of fresh statistics from the API on the dynamics of commercial oil reserves in the United States.

 

Regarding the chart, lateral movement continues to develop in a very narrow range, located below the level of 25.50. While the price is kept below this mark, the scenario with a downward exit from the flat 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 the level of 23.20.

 

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

 

The current fundamental outlook is neutral. There are no good entry points on the chart at the moment, so we recommend that you refrain from trading this instrument for a while.

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