The oil market at the start of the new trading week shows a significant decline in response to a significant adjustment in prices for supplies to Asia from Saudi Arabia.
Saudi Aramco cut Arab Light crude oil prices over the weekend for sale in Asia in October. The decline was the largest since May of this year. Apparently, hopes for a recovery in fuel demand in the region, which is one of the world's largest oil exporters, are dimmed by the spread of the COVID-19 pandemic. According to Johns Hopkins University, the number of COVID-19 cases in the world continues to rise, with nearly 27 million as of September 7. Over the weekend, India came in second in terms of the number of infected, pushing Brazil to third place.
The IEA believes that now the market is experiencing a slowdown in the recovery of demand for energy and in the near future demand is likely to remain stable, holding on to the achieved values.
This is a negative signal for the market, since many investors previously bought this asset, betting on further recovery of the global economy and demand for energy.
Today in the United States is a day off - Labor Day.
On the chart, the price broke through the support at 39.80 and tested the 38.70 level today. Bearish signals are getting stronger. Today we expect a second approach to support at 38.70 and, possibly, a breakdown of this level.
The main scenario - an increase to 40.25 and a downward reversal.
An alternative scenario - a decline from current levels.
The current fundamental outlook is negative.We consider shorts in the range 39.80-40.25.
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