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WTI has consolidated below $ 40

Oil prices declined on Wednesday after the API reported an increase in oil inventories for the week by 0.7 million barrels. Experts expected a decrease in reserves by 4 million barrels.

 

The market is increasingly concerned about further recovery in energy demand. In the coming months, the market situation may deteriorate significantly due to the active spread of a new wave of the coronavirus pandemic in Europe and other regions. Investors react extremely negatively to the news about the tightening of quarantine measures in a number of countries, which will negatively affect the pace of economic recovery in these regions and the level of demand for oil and other energy resources.

 

The reports of an increase in oil supplies from Libya add fuel to the fire. A 9-month blockade was lifted from a number of oil infrastructure facilities and the country is gradually starting to increase supplies to the international market. Libya's National Oil Company expects oil production to rise by more than a quarter of a million barrels per day by next week.

 

Today in the economic calendar it is worth paying attention to the publication of preliminary September data on PMI of the manufacturing sector and the service sector. This data can have a profound effect on investor risk appetite.

 

Investors will also be watching the publication of weekly statistics from the EIA. Stocks are projected to decline by just over 2 million barrels.

 

There are still no positive signals on the chart. Bears are increasing pressure to the 39.15 level. We are expecting a breakdown and a decline to 38.60.

 

  • Resistance levels: 40.00, 40.50, 41.40.

 

  • Support levels: 39.15, 38.60, 37.30.

 

The main scenario is a breakdown of support at 39.15 and a decline to 38.60.

 

An alternative scenario is an increase to 40.50.

 

The current fundamental outlook is negative. We consider shorts from levels 40.00 and 40.50.

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