Oil prices in the first half of the day are kept in the red trading zone. The market remains concerned about the prospects for a recovery in energy demand amid increased quarantine measures in many countries of the world.
Last week, oil was under pressure from reports of the discovery of a new strain, COVID-19 B.1.1.7. over the weekend, reports surfaced of a second mutant strain of the virus, believed to originate in South Africa. Considering the above, an increasing number of countries are imposing restrictions on the movement of citizens in order to curb the spread of the virus and reduce the burden on the health care system, which in many countries is working to the limit of its capabilities.
Many experts predict a surge in coronavirus incidence after the Christmas holidays.
Local support for the market is provided by the news that Donald Trump agreed to sign a law on the implementation of additional measures to stimulate the US economy in the context of the coronavirus pandemic.
Thus, the oil market is approaching the end of 2020 with a negative mood. Short-term risks of lower energy demand outweigh news of new stimulus measures and optimism over COVID-19 vaccinations. The pressure on oil prices is also exerted by the expectations of an increase in the level of oil production from January 1 on the part of the OPEC + countries. The cartel will increase production by 500,000 barrels per day.
On the chart, the struggle for the level of 48.00 continues. We expect the price to go up from the local consolidation. The main target for the bulls is still the 50.00 level. After testing this mark, we can expect the formation of a fairly strong correction.
The main scenario is growth towards 50.00.
An alternative scenario is a decline to 46.35.
The current fundamental outlook is moderately negative. We consider longs with very moderate risks from the level of 47.60.
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