Oil prices on Thursday continue to decline amid rising US oil inventories and concerns over the outbreak of the second wave of the pandemic. The new COVID-19 outbreak could slow down the recovery of the global economy and energy demand.
According to recent reports, in recent days, the number of patients with coronavirus in the United States, Australia, Latin America and Asia has risen sharply. Countries are again reinforcing restrictive measures, which will severely restrain further growth in fuel demand. Today, Qantas Airways announced that air traffic will remain low until at least July 2020. The company is forced to cut a fifth of its personnel and suspend flights of about 100 aircraft.
According to the EIA, oil reserves in the US for the week increased by 1.4 million barrels. Experts predicted a more modest increase in stocks at 0.3 million barrels. For the third consecutive week, the general level of US oil reserves is updating historical highs.
Many experts reassure the market noting that the increase in US oil reserves is associated with the sale of oil from Saudi Arabia, which was bought by US refiners in March and April, when prices were very low. Soon, the volume of these deliveries will decrease and the level of stocks in the USA will decrease.
Regarding the chart, the main attention today should be focused on the level of 37.00. If the price overcomes it, the next target for bears will be the mark 34.50. We consider this scenario as a priority.
The main scenario - a breakdown of support at 37.00 and a decrease to 34.50.
An alternative scenario - a consolidation in the range of 37.00-38.50.
The current fundamental outlook is moderately negative. We would consider shorts from the level of 38.00.
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