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Oil prices retain good potential for further growth

Oil prices are trading higher today, recovering from the previous day's losses.

Trump's unexpected decision to suspend inter-party negotiations and the formation of a new package of measures to help the economy put pressure on all commodity assets, including oil.

 

Earlier it was reported that Democrats and Republicans have made some progress in negotiations and investors were hoping for an agreement before the US presidential election. The new stimulus program could reduce the impact of the spread of the new wave of the COVID-19 pandemic and accelerate the recovery of the American economy. In that case, oil producers could count on an increase in demand for energy. Trump's decision is postponing negotiations until the end of the presidential election on November 3.

 

Investors today turned their attention to news of another worsening of weather conditions in the Gulf of Mexico. Hurricane Delta is gaining momentum. Many companies have again mothballed their oil platforms and evacuated workers. This news is now supporting oil prices.

 

Investors are also responding positively to messages from Norway. The Lederne union said the oil workers' strike would be extended until October 10, unless a new wage agreement is agreed soon. In connection with the intensification of the strike, six offshore oil and gas fields were closed on Monday, which led to a decrease in production in Norway by 8%.

 

Today investors will be watching the release of weekly industry statistics from the US. Experts predict an increase in oil reserves by 0.294 million barrels.

 

On the chart, we mark the unsuccessful attempt of the bulls to gain a foothold above the level of 40.50. While the price remains below this level, the priority remains the scenario with a decline in quotes.

 

  • Resistance levels: 40.50, 41.40, 42.10.

 

  • Support levels: 39.80, 39.40, 38.80.

 

The main scenario - a decline to 39.40.

 

An alternative scenario - a breakdown of resistance at 40.50 and an increase to 41.40.

 

The current fundamental outlook is moderately negative. We consider shorts from the level of 40.50

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