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Oil prices are under pressure on Monday due to declining consumption in India

Oil prices are lower on Monday as the coronavirus pandemic has led to a sharp drop in energy demand in India, undermining investor optimism about a recovery in global oil demand.

According to preliminary data, restrictive quarantine measures in India have led to a decrease in gasoline demand by about 7% compared to 2019 levels. Demand for diesel fuel is also actively decreasing. At the same time, experts predict a further reduction in demand for energy resources due to the introduction of new quarantine measures, since a new surge in the incidence was recorded in the country over the weekend, more than 400 thousand new cases of infection were registered per day. It’s important to note that India is the third largest consumer of energy resources in the world.

Market pressure may also come from reports that Iran and the US are continuing negotiations to reopen a nuclear deal that could lead to the lifting of US sanctions. This will allow Iran to increase its oil exports.

The chart is dominated by bearish signals. The price was unable to overcome the resistance level 63.80 and now a downward wave is developing on the chart with the first target at 62.50.

  • Resistance levels: 63.80, 64.70, 66.20.
  • Support levels: 62.50, 60.80, 59.40.

The main scenario is a decline to 62.50.

An alternative scenario is a breakdown of the resistance at 63.80 and an increase to 64.70.

The current fundamental background is moderately negative. We consider shorts on a pullback to the 63.80 level.

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