Fundamental analytics

Oil prices stabilized

WTI

 

The oil market is constrained in the red zone on Thursday amid continuing concerns about a decrease in energy demand.

 

Existing transport restrictions and quarantine measures in many countries exacerbate the imbalance towards oversupply. Also, traders fear a significant increase in supply volumes from April 1, when the OPEC + agreement to limit production ceases to apply.

 

Locally, the support factor for oil prices is the news of the US Senate adopting a bill on a package of measures to stimulate the economy by 2 trillion dollars. Investors hope that these measures will mitigate the impact of the coronavirus pandemic.

 

But the medium-term outlook for the oil market remains bleak. The imbalance will intensify amid declining demand and rising production volumes. According to IHS Markit, in the 2nd quarter oil demand may decline by 14 million barrels a day. Analysts at JBC Energy estimate that demand could fall by 15.3 million barrels.

 

Regarding the chart, we note a significant decrease in trading volatility. Bidding takes place in a narrow flat of 23.20-25.75. Today we expect further development of the flat.

 

· Resistance levels: 25.75, 27.50, 30.30.

 

· Support levels: 23.20, 21.30, 20.35.

 

The main scenario - consolidation in the range of 23.20-25.75.

 

An alternative scenario - a breakdown of resistance at the level of 25.75 and an increase towards 27.50.

 

The fundamental outlook is neutral. We consider longs with moderate risks from the level of 23.20.

 

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