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WTI is holding the $40 mark

Oil prices are on a slight decrease. Market pressure was exerted by API oil reserves data. Over the reporting week, an increase in reserves of 2 million barrels was recorded, with a forecast of -3.7 million barrels.

 

Investors anticipate a growing imbalance in favor of oversupply, as the ever-growing number of cases of COVID-19 infection will hinder economic recovery and energy demand. Many States are again implementing restricting measures that limit the mobility of citizens. Considering the above, demand for gasoline in the United States will be held at levels well below normal.

 

OPEC's future plans to reduce oil production remain uncertain. The current agreement to limit production will end in July. The participating countries have not yet agreed on further actions to stabilize the market situation. Many hoped for a recovery in energy demand in the summer, but a new wave of a pandemic could substantially correct these expectations. OPEC energy ministers will discuss these issues next week. Many experts believe that OPEC countries will increase production quotas in August, which may put additional pressure on oil prices.

 

Today, the market will be focused on the data on oil reserves published by EIA. Experts predict a decrease in reserves by 3.1 million barrels.

 

Regarding the chart, trading takes place in a narrow range, between levels 39.80-41.10. As a priority, we consider an upward break from the flat.

 

  • Resistance levels: 41.10, 42.00, 44.00.

 

  • Support levels: 39.80, 38.70, 37.00.

 

The main scenario - further growth and a breakdown at 41.10.

 

An alternative scenario - a breakdown of support at 39.80 and a decline to 38.70.

 

The current fundamental outlook is moderately negative. We would consider longs with very moderate risks from the level of 39.80.

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