Fundamental analytics

WTI: the oil market starts the trading week with moderate growth

WTI

Oil quotes are showing moderate growth on Monday amid the prevailing positive sentiment on stock markets.

 

Investors are reacting positively to statements by US House Speaker Nancy Pelosi that an agreement on a new package of economic support measures could be adopted on Tuesday. The new bailout program could accelerate the recovery of the US economy, which will boost energy demand.

 

During the Asian trading session, the market reacted ambiguously to mixed statistics from China, which is the world's largest energy consumer. The growth rate of China's GDP did not reach the forecast, the fact is 4.9%, the forecast is 5.2%, but the data on industrial production significantly exceeded market expectations, the actual value is + 6.9%, the forecast value was + 5.8%.

 

Fears related to the coronavirus pandemic and news about the recovery of production in the United States and some OPEC countries continue to have a restraining effect on the growth of oil prices.

 

The data released on Friday showed that the maximum number of new drilling rigs was put into operation in the United States in a week since January this year. These data indicate a recovery in production in the Gulf of Mexico.

 

The local fundamental background in the market has a positive impact on oil prices, but, obviously, the growth of quotations will be limited.

 

On the chart, buyers are increasing upward pressure to 41.40. We expect a breakdown and growth of quotations to 42.10.

 

· Resistance levels: 41.40, 42.10, 42.80.

 

· Support levels: 40.50, 39.60, 38.65.

 

The main scenario - a breakdown of resistance at 41.40 and an increase to 42.10.

 

An alternative scenario - a decline from the current levels to 40.50.

 

The current fundamental outlook is moderately positive. We consider longs near the level of 40.50.

 

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