Oil is being traded in different directions on Wednesday. During the Asian session, trading took place in the green zone. With the beginning of the European trading session, the price resumed its downward movement. Pressure on the price was exerted by reports that the Saudi Ministry of Energy ordered Saudi Aramco to increase production from 12 million barrels per day to 13 million barrels. CEO Amin Nasser said today that the company will make every effort to complete this task. Nasser also noted that in April Saudi Aramco will increase the volume of oil supplies to the market up to 12.3 million barrels per day.
The confrontation between Saudi Arabia and Russia is growing, which is a serious bearish factor for the oil market. A further increase in energy supplies amid a slowdown in the global economy will increase the imbalance in the market. Excess supply in conditions of limited demand will further reduce oil prices.
Regarding the economic calendar, the main focus should be on the weekly US Department of Energy inventory data. The growth of reserves is expected to reach 2.3 million barrels.
A downward wave is developing on the chart after the bulls could not gain a foothold above the 35.70 mark. The intraday target for bears is the level of 32.75. In the medium term, we can expect a decrease to 30.50. Upward correctional movement can only be expected after the price fixation above the level of 35.70.
· Resistance levels: 35.70, 37.00, 40.50.
· Support levels: 32.75, 30.50, 27.00.
The main scenario - a decline towards 32.75.
An alternative scenario - a breakdown of resistance at the level of 35.70 and an increase towards 37.00.
The fundamental outlook is neutral. We consider shorts from the level of 35.70.