Oil prices are declining on Tuesday due to concerns regarding oversupply.
Libyan state-owned oil company “National Oil Corporation” reported making progress in negotiations with neighboring countries to lift the export blockade. Libya provides about 1% of world oil supplies. Investors fear a greater imbalance in the market if supplies increase, as energy demand remains unstable.
COVID-19 related news continue to pressure oil prices. New restrictive measures in the US and other countries could slow down the process of restoring energy demand.
In the coming days, industry data from the US will be the focus of market attention. Later today, inventory data from the API is expected to be published. An EIA report will be presented on Wednesday. A preliminary Reuters poll demonstrates that US crude inventories fell from record highs last week, while gasoline inventories fell for the third week in a row.
Regarding the chart, the price tested local resistance at 39.75. It was not possible to consolidate above this mark. Today we expect a decline in quotations in the direction of the level of 38.50.
· Resistance levels: 39.75, 41.10, 42.00.
· Support levels: 38.50, 37.00, 34.50.
The main scenario - a decline towards 38.50.
An alternative scenario - a breakdown at 39.75 and an increase in the direction of 41.10.
The current fundamental outlook is moderately negative. We would consider shorts from the level of 39.75.