Oil prices rose on Wednesday to their highest level since February 2020 after Saudi Arabia agreed to cut production by 1 million barrels. per day in February-March of the current year. This is significantly more than investors expected. Even the scenario with maintaining the current production level was considered acceptable. Industry data from the USA became an additional factor of support for the market. According to the API for the week, the level of US oil reserves fell by 1.66 million barrels.
Following a 2-day meeting, the largest oil producer Saudi Arabia voluntarily agreed to cut production by 1 million barrels. per day to convince other OPEC + participants of the need to comply with the current agreements on production.
Amid the active spread of the coronavirus, many countries around the world have tightened restrictions on the movement of citizens, which puts strong pressure on the level of demand for energy. In these conditions, the OPEC countries are trying to maintain the current price level by reducing the level of production.
In the afternoon, investors will await the publication of EIA data on oil and oil products reserves. Experts predict a decrease in oil reserves by 1.27 million barrels.
Buyers are now trying to gain a foothold above the psychologically important 50.00 mark. If they succeed, the price will be able to continue moving up to new multi-month highs. Within the day, you should give preference to buying the instrument, but you should look for entry points no higher than the level of 49.50.
The main scenario is a pullback to 49.50 and growth above 50.00.
An alternative scenario is a breakdown of support at 49.50 and a fall to 48.00.
The current fundamental outlook is moderately positive. We consider longs on a pullback to 49.50
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