Positive news on the process of trade negotiations last week provided tangible support to oil prices, but eventually the sides failed to reach the breakthrough in negotiations. They just agreed upon increase of purchasing by China the U.S. agricultural products and suspension of threatened tariffs which should be imposed this week. At the same time a new conflict is being ignited between USA and China. The sides put mutual visa restrictions on officials amid ongoing abuses of Muslim minorities in the Xinjiang region. On this background ability to secure an agreement remains in question.
We can relate to market support factors reports on increase of oil import in China by 11% comparing to the same period last year. This data shows evidence of growth in energy demand by the world’s largest economy.
On the chart upward movement continues to develop locally with the main target still at the 61.40 level. It’s the closest strong resistance level capable to produce tangible impact on the price.
Resistance levels: 60.00, 61.40, 64.35;
Support levels: 58.80, 57.20, 55.55.
Main scenario: Growth in direction 61.40.
Alternative scenario: Break of support at 58.80 and decline towards 57.20.
Moderately-negative sentiment prevails on the market. There are no clear signals on the chart to enter the market. We recommend to consider long-positions during decline of the price towards 57.20.