The oil market is on a slight decline today. The main factor behind pressure on prices remains the news about the spread of the COVID-19 pandemic and the introduction of local restrictions in some countries, including the United States.
Yesterday oil prices increased despite the publication of data on the growth of oil reserves by 5.65 million barrels, against the forecast of -3.1 million barrels. The driver of growth was data on changes in gasoline inventories. The volume of reserves decreased by 4.8 million barrels. But investors continue to show cautious optimism, as new restrictive measures in some US states may hold back recovery in fuel demand.
The market is also in anticipation of the July 15 meeting of the OPEC + monitoring group. The current production limit agreement expires in July. Exporting countries must decide on future policies. The lifting or partial relaxation of production restrictions may put significant pressure on oil prices in a situation of general uncertainty and instability.
Regarding the chart, trading is still constrained in a narrow range, between the levels of 39.80-41.10. Now buyers are increasing upward pressure on the upper border of the flat. We can expect a breakdown of this level.
The main scenario - a breakdown of resistance at the level of 41.10.
An alternative scenario - further trading in the flat of 39.80-41.10.
The current fundamental outlook is neutral. We would consider longs with very moderate risks from the level of 40.30.
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