Oil prices today are constrained within a narrow range, demonstrating a tendency to form a moderate downward movement. Concerns related to the spread of the coronavirus epidemic and a decrease in global energy demand continue to exert pressure on the oil price.
The International Energy Agency (IEA) stated that the coronavirus epidemic could provoke a drop in oil demand in the 1st quarter of 2020 by 0.435 million barrels per day. This will be the first quarterly decline in oil demand since the financial crisis in 2009.
Another negative factor for the market is the preliminary data released today on Japan's GDP for the 4th quarter of 2019. Compared to the same period in 2018, Japan's GDP fell by 6.3%.
All investors are hoping for a good outcome of the OPEC meeting. During the meeting a decision can be made to reduce production quotas. Earlier, the OPEC technical committee recommended that countries participating in the cartel reduce production by 0.6 million barrels per day.
Today it is worth mentioning that in the USA it is a national holiday and all financial markets of the country will be closed.
A very ambiguous situation has now been formed on the chart. We see buyers trying to gain a foothold above the level of 52.00. This is a signal in the direction of the upward movement towards 53.10. On the other hand, bears are actively trying to return prices at 52.00, which will be a signal for the formation of a downward movement towards 50.50.
Resistance levels: 53.10, 54.00, 55.05.
Support levels: 52.00, 50.50, 49.30.
The main scenario - a decline towards 52.00 and further downward movement.
Alternative scenario - growth towards the level of 53.10.
The fundamental outlook is moderately negative. Despite the local correction on the chart, the bearish trend remains relevant, so within the daily framework, we give preference to shorts. Entry points should be considered at levels 52.00 and 53.10.