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Oil is on a decline

Oil prices are declining amid fears that rising COVID-19 cases could limit the recovery in energy demand.

 

The latest data suggests that gasoline demand in the United States is declining again due to the spread of the pandemic and tightening quarantine measures in many states. Taking that into consideration, American oil producers continue to reduce their production capacity. The number of active gas and oil rigs continues to decline for 11 weeks consequently.

 

Data released on Monday demonstrated that Japan's oil imports fell 14.7% in June, compared with the same period last year. For comparison, in May, the volume of oil imports fell by 25%. Energy demand has slightly recovered, but remains well below pre-crisis levels.

 

Bidders have yet to respond to reports that Saudi Arabia's King Salman bin Abdulaziz was admitted to hospital with gallbladder inflammation. The king is already 84 years old. Any changes in the leadership of Saudi Arabia could have a significant impact on the market, since the country is the leader of OPEC and the largest supplier of oil to the world market.

 

The 38.70-41.10 flat remains on the chart. Last week the price was unable to overcome the resistance at 41.10. In the near future, we can expect a local downward movement towards the level of 38.70.

 

  • Resistance levels: 41.10, 42.00, 44.00.

 

  • Support levels: 38.70, 37.00, 34.50.

 

The main scenario - a decline to 38.70

 

Alternative scenario - consolidation above 41.10 and growth to 42.00.

 

The current fundamental outlook is moderately negative. We would consider shorts near the level 41.10

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