Fundamental analytics

WTI and Brent are down by more than 2.5%


Brent and WTI crude oil prices are down by more than 2.5% amid rising COVID-19 infections worldwide and rising production in major oil-producing countries.


The United States has a record number of COVID-19 cases for the second day in a row. In France, more than 50 thousand new cases of infection were registered per day. The Spanish authorities re-introduced a state of emergency in the country. The epidemiological situation in Russia and Italy continues to deteriorate. Against this background, the market is increasingly concerned about the further dynamics of demand for energy resources. New tough quarantine measures could severely reduce energy demand as production continues to rise.


The Libyan National Oil Corporation stated on Friday that production will reach 1 million barrels per day in just four weeks, faster growth than many analysts had predicted. It is important to note that before the full stop of production, Libya supplied about 1.2 million barrels of oil per day.


OPEC + countries also intend to increase production by 2 million barrels per day in January 2021. The participating countries are not yet discussing the issue of extending the current agreement to limit production. Although earlier Russian President Vladimir Putin stated that he could agree to an extension of the OPEC + oil production cut.


An important support level of 39.60 has been broken on the chart. This is a strong signal in favor of a further decline in quotations. The 38.65 level is unlikely to keep the price down. We are expecting a drop in quotations to 37.00.


· Resistance levels: 39.30, 39.90, 40.50.


· Support levels: 39.65, 37.00, 36.60.


The main scenario is a decline to 37.00.


An alternative scenario is a breakdown of resistance at 39.30 and growth to 40.50.


The current fundamental outlook is negative. We consider shorts from the levels of 39.30 and 39.60.


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