Oil prices continue to decline amid IEA claims of market imbalance in favor of oversupply.
At the Reuters Global Markets forum, the head of IEA Fatih Biro stated that the weak market reaction to interruptions in energy supplies from Libya and Iraq is due to the fact that the supply continues to exceed the demand for energy. Short-term production suspension does not affect the supply of energy resources to the market.
The market is also focused on the reports of an outbreak of a new coronavirus strain in China. Investors fear an epidemic that could be comparable to an outbreak of SARS in 2003. According to some experts, the outbreak of the new virus could lead to a decrease in oil demand by 0.260 million barrels per day and lower oil prices by $2.9 per barrel.
Regarding the chart, a flat of 57.60-59.00 continues to develop. Locally, we note the increase in pressure to the level of 57.60, which increases the likelihood of the price going down from the flat. In this case, the next target will be the level of 56.70.
· Resistance levels: 58.00, 59.00, 60.00;
· Support levels: 57.60, 56.70, 55.05.
The main scenario - a decline towards the level 56.70.
An alternative scenario - a consolidation above the level of 58.00 and growth towards 59.00.
The fundamental outlook is neutral. The chart is dominated by bearish signals. Within the daily framework, we consider shorts from the level of 58.00.