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Oil is on a decline

Oil prices are declining on Tuesday amid concerns over the spread of coronavirus.

The COVID-19 pandemic shows no signs of weakening. 11.5 million cases of infection have already been registered in the world. More than 3 million were infected in the United States, of which 130 thousand people died. In 16 US states a record increase in the number of new cases of COVID-19 is reported in the first five days of July. There is growing concern that new quarantine measures will hinder the process of restoring fuel demand.

 

The situation in Asia is not much better. India reported more than 23,000 new cases of COVID-19. There are new foci of the spread of the virus in other countries of the region.

The oil market is once again under pressure, despite support for record cuts in supplies from OPEC+. Today, the API is expected to report an increase in oil reserves of 0.1 million barrels.

 

Additional pressure on oil prices today is exerted by the situation on stock exchanges (the main indices are constrained in the red zone) and the USD dynamics (increase of 0.3%).

 

Regarding the chart, the price rolled back to the level of 40.00. So far, the bulls manage to keep the price above this mark, therefore, today we consider the scenario with the development of a flat in the range 40.00-41.10 as a priority.

 

  • Resistance levels: 41.10, 42.00, 44.00.

 

  • Support levels: 40.00, 38.70, 37.00.

 

The main scenario - flat consolidation in the range of 40.00-41.10.

 

An alternative scenario - a decline below the 40.00 mark and further pullback to 38.70.

 

The current fundamental outlook is moderately negative. We would consider longs with very moderate risks from the level of 40.00.

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