Last week, Brent and WTI rose more than 9%. Investors reacted positively to reports of short-term production cuts in the US and Norway.
On Monday, the market situation changed dramatically. Brent and WTI are down more than 1% amid recovery in production in the Gulf of Mexico and the end of the strike in Norway. Additional pressure on oil prices is exerted by the growing concern of investors about the prospects for the development of the global economy amid the active spread of the second wave of the coronavirus pandemic. The EU countries are actively introducing new quarantine measures, which will inevitably lead to a slowdown in economic recovery and a decrease in demand for energy.
After Hurricane Delta weakened, American oil producers began to recover production. Workers are actively reactivating oil platforms. Total announced over the weekend that it was restarting its Port Arthur, Texas refinery with a capacity of 225,500 barrels per day.
On Sunday, the Libyan authorities announced the restoration of production at the largest oil field, Shararah. This means that the country will be able to increase production by 335 million barrels in a short time per a day.
A pullback movement develops on the chart after buyers failed to gain a foothold above 41.40. Local support at 40.50 has been broken. During the day, we can expect a decline to the area of 39.60.
The main scenario is a decline to 39.60 and a renewed upward movement.
Alternative scenario - consolidation above 40.50 and growth to 41.40.
The current fundamental background is negative. Consider shorts near 41.40.
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