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API data provided moderate support to the oil market

API data on declining oil inventories supported the oil market, somewhat alleviating investor concerns about a weak recovery in demand amid the spread of COVID-19 in the United States.

 

Experts expected a decline in the level of reserves by 1.2 million barrels. The actual decline in the indicator exceeded 6.8 million barrels. Investors are optimistic about the publication of the weekly EIA report. Experts predicted an increase in reserves by 0.357 million barrels. These API reports increase the likelihood of more positive data for the market.

 

Investors are so far showing rather restrained optimism. For a confident recovery in oil prices, it is necessary to wait for a steady downward trend in oil and gasoline reserves. According to the latest data, there is a 25% decrease in the number of car travel in the United States and an almost 75% decrease in passenger air travel. Obviously, in this situation, the demand for fuel remains significantly lower than the levels of previous years. Refinery crude refining rates remain about 17% below the seasonal average over the past five years, according to the US Energy Information Administration.

 

Regarding the chart, trading is still constrained within the 40.75-41.75 flat. During the day, the situation on the chart has not fundamentally changed, so today we are expecting further flat movement.

 

  • Resistance levels: 41.75, 42.30, 43.75.

 

  • Support levels: 40.75, 38.70, 37.00.

 

The main scenario - consolidation in the range of 40.75-41.75.

 

An alternative scenario - a breakdown of support at 40.75 and a decline in the direction of 38.70.

 

The current fundamental outlook is neutral. We would consider both longs and shorts based on the borders of the price channel 40.75-41.75.

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