On Wednesday, the oil market decreased as the teleconference of finance ministers and G7 Central Banks heads yesterday failed to allay investor concerns regarding the economic impact of the coronavirus epidemic.
Large-scale programs of the world Central Banks to mitigate monetary policy may reduce the economic consequences of the epidemic, but they will not be able to change the general trend of the market. Obviously, the impact of the coronavirus epidemic on the global economy will be more powerful and lasting than previously expected. The global economy will shrink, which will inevitably lead to lower energy demand.
Now all investors in the oil sector hope for the situation to improve due to the OPEC + meeting, which will be held later this week. On Tuesday, the OPEC + committee recommended reducing production by 1 million barrels per day. This information may indicate that Russia and Saudi Arabia are close to an agreement on the implementation of measures to stabilize oil prices.
However, Morgan Stanley experts recently lowered forecasts for the oil price for the second quarter. The average Brent price is expected to be $ 55, while the WTI is $ 50. Analysts say that due to the epidemic, oil demand growth in China and other countries will be close to zero.
Today, investors will follow the publication of the weekly report of the US Department of Energy.
Regarding the chart, we can record a horizontal range. The exit level of the horizontal range will determine the further vector of price movement. With the breakdown of the level of 46.65, we can expect the development of a downward movement towards the level of 43.75. Fixation above 48.40 will indicate the desire of players to continue to move up.
Resistance levels: 48.40, 50.20, 52.00.
Support levels: 46.65, 45.15, 43.75.
The main scenario - a breakdown of support at the level of 46.65 and a decline towards 45.15.
An alternative scenario - a breakdown of resistance at the level of 48.40 and an increase towards 50.20.
The fundamental outlook is moderately negative. We consider shorts from the level of 47.80.