Brent oil prices continue to slide from strong resistance level of $66 per barrel to this year lows of $64. International energy agency (IEA) released a forecast for 1H2020 with a surplus of 1 mln barrels per day that keeps the prices at their lows.
A new negative factor for the oil market is the outbreak of a new strain of coronavirus (2019-nCoV) in China. Although the massive worldwide outbreak of the virus is unlikely Goldman Sachs estimates the virus could wipe out 260,000 bpd demand from the oil market in 2020. "Such a demand impact (without an OPEC supply response) would point to an only $3/bbl impact on oil prices, although the initial high uncertainty could lead to a larger sell-off, as was the case in March 2003", said Goldman.
The market is looking for an oil reserves and production data in the United States due to be released Jan. 23. The continuous growth in US oil production reached 13 mln bpd. Further growth could put additional pressure on oil prices.
On the other hand unfolding military conflict in Libya continue to disrupt oil supplies from the country worth 800,000 bpd. OPEC+ agreement on oil production cuts is extended at least for 1H2020 and is partially offsetting the excessive world supply. Bank of America estimates oil demand to rise by 1.1 mln bpd. That could lower the surplus to only 190,000 bpd this year. Demand for fuel is seen elevated in coming spring and driving season. That could support oil prices.
Technical picture points at strong support level for Brent oil at $63 (Dec 2019-Jan 2020 lows). Investors could consider the possibility the price could bounce from this level and move higher to $66-67. In alternative scenario the price may break the resistance level and slide to $60,5-$61.
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
Indiscriminate reliance on illustrative or informational materials may lead to losses
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2022 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.