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At the beginning of the trading week, oil prices are under pressure

Oil prices are showing a moderate decline on Monday amid news of the spread of the coronavirus in the US and other countries.

 

Quarantine measures in Southern California were seriously tightened over the weekend, and a new record incidence was recorded in Los Angeles. South Korea also announced strengthening control over the epidemiological situation in the country. The authorities have tightened measures of social landing in Seoul and surrounding areas by the end of the month. In the southern German region of Bavaria, quarantine measures will be tightened from Wednesday until January 5.

 

The news coming to the market indicates that the epidemiological situation in the world remains tense. The new quarantine measures will inevitably have a negative impact on the level of fuel consumption in the US and other countries.

 

News from the US also has a negative impact on the oil market. On Friday it became known that the US oil companies have again increased the number of active drilling rigs. This is facilitated by the rise in oil prices in recent weeks.

 

Also, the media report that Iran is preparing to increase oil production over the next three months in the hope of easing US economic sanctions after returning to the discussion of the nuclear deal.

 

On the chart, buyers still have a chance to continue the upward movement, but for this they need to consolidate above the level of 46.30. Until this happens, the priority remains the scenario with the development of a rollback movement towards the level of 44.80.

 

  • Resistance levels: 46.30, 47.00, 48.40.

 

  • Support levels: 44.80, 43.50, 42.80.

 

The main scenario is a decline to 44.80.

 

An alternative scenario is a breakdown of the resistance at 46.30 and growth to 47.00.

 

The current fundamental outlook is moderately negative. We consider shorts with very moderate risks in the range of 46.30-46.50.

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