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Oil prices are recovering after updating nearly 1.5-month lows

On Wednesday, oil prices are recovering after a strong decline the day before. The rise in prices is primarily due to the influence of technical factors, since the fundamental background remains bearish. Some investors fixed short positions in the instrument after updating the minimum for almost 1.5 months of trading.

A downward impact on trading today is exerted by the situation on stock exchanges and industry statistics from the United States.

Investor risk appetite has fallen sharply amid statements by the US Treasury Secretary of a possible tax hike. Investors also react negatively to reports of a worsening epidemiological situation in Europe and the extension of restrictive measures. Concerns are raised by reports of an increase in the number of COVID-19 cases in India, the world's third largest oil importer.

Crude oil supply data from the American Petroleum Institute showed that inventories rose by 2.927 million barrels over the week. EIA reserves data will be released later. The indicator is forecast to decline by 0.27 million barrels.

In less than 2 weeks, oil prices fell by more than 12% due to low demand for fuel, worsening prospects for the global economic recovery and the strengthening of the US currency, in which all commodity assets are denominated. A sharp drop in oil prices could induce OPEC + countries to extend existing production restrictions to stabilize the market situation. Recall that the next OPEC + meeting is scheduled for April 1.

On the chart, we saw a breakdown of the 59.15 level and a decline in quotations to the next support at 57.20. Now a pullback movement is developing from this mark. We are waiting for the recovery of quotations to the area of ​​59.15 and the resumption of the downward movement.

  • Resistance levels: 59.20, 61.45, 63.40.
  • Support levels: 57.20, 55.35, 51.80.

The main scenario is an increase to 59.20 and a downward reversal.

Alternative scenario - consolidation above 59.15 and growth to 61.45.

The current fundamental outlook is negative. We are looking for sell signals in the area of 59.20.

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