Oil market on Tuesday was traded in the red despite a nine-month rollover of oil supply cuts.
Analysts say, that extension of OPEC+ agreement is a required minimum to stabilize the situation on oil market, but so far it’s insufficient for growth of crude prices, since now investors again have fears regarding drag down of energy demand linked to the slowdown in global economy. Let’s remind, that earlier IEA, U.S. Energy Department and OPEC has lowered the crude demand forecasts for 2019.
Negative influence on oil market is also produced by the situation on equity markets, where the major indices are being traded in the red reflecting low demand in dicey assets, that traditionally include crude oil.
Among positive news now we can distinguish only the data from API published the day before, that put on record decline in oil inventories for the week by 5 million barrels. This data indicates, that statistics from U.S. Department of Energy can be better than market expectations and actual decline in oil inventories for the week will be lower than predicted figure of 2,964 million barrels.
Also during the trading we have to take into consideration the fact, that in the run-up of Independence Day close of all marketplaces is expected in the United States today.
On the chart a true break of the support level 63.30 took place. It’s a good bearish signal, that sets the next target for price movement at the 61.00 level. At the same time 63.30 mark is switching from support to quite a stiff resistance, where we can seek for short-positions entry points.
Resistance levels: 63.30, 66.00, 68.80;
Support levels: 61.00, 59.50, 59.00.
Main scenario: Correction towards 63.30 and decline towards 61.00.
Alternative scenario: Decline towards 61.00 from current levels.
Quite a strong bearish wave develops on the market, therefore within intraday time-frame we give preference to short-trades, that should be considered at the 63.30 level.