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Oil prices drop amid reports of rising COVID-19 cases

In Asia, oil prices fell slightly on Monday amid growing concerns about the spread of COVID-19, which could have a negative impact on the recovery in energy demand.

In recent weeks, there has been a surge in incidence in India. Over the weekend, Hong Kong banned all flights from that country, as well as the Philippines and Pakistan. 

 

Investors fear that new restrictive measures to contain the pandemic will have a negative impact on economic activity and energy demand.

 

On Monday, India reported a record rise in the number of coronavirus cases at 273,810, bringing the total number of cases to 15 million. Deaths from COVID-19 in India rose by a record 1,619 to nearly 180,000.

 

Rising incidence is observed in the third largest economy in the world - Japan. The fourth wave of COVID-19 is currently underway in the country, according to Reuters. Business is preparing for new restrictive measures.

 

According to data released on Friday, US oil companies continue to increase the number of active drilling rigs for the fifth week in a row. The growth in activity is facilitated by the dynamics of oil prices, which have increased significantly in recent weeks.

 

On the chart, buyers keep the price above the level of 62.70, therefore, we consider the scenario with the growth of quotations towards the level of 64.70 as a priority.

 

  • Resistance levels: 64.70, 66.20, 67.40.

 

  • Support levels: 62.70, 60., 80, 59.65.

 

The main scenario is growth in the direction of 64.70.

 

An alternative scenario - consolidation below 62.70 and falling to 60.80.

 

The current fundamental background is moderately negative. We consider longs with very moderate risks from the level of 62.60.

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