OIL WEEKLY ANALYSIS – STALLED WEEK FOR THE OIL MARKET

OIL
WEEKLY ANALYSIS – STALLED WEEK FOR THE OIL MARKET

After the technical correction experienced in the market last Friday, the wrecked oil
market had what is considered a flat trading week, forming a consolidation
channel within 25- & 21-dollar range, market sentiment remains skeptical
with investors in “sit-and-wait” mode weighting the outcomes of events in
different fronts before placing their bets.

On
one side, the market is waiting for April to validate the ramp-up in production
announced by the Saudis that will overflow the market with the black commodity,
budgetary cuts in major oil producers’ companies were also announced. And last
but not least, the confirmation this week of a possible alliance between the US
and Saudis to curb the damaged oil market.

The
technical chart does not say much. The market is still under intense bearish
pressure, trading within a consolidation channel. Here MACD also confirms a
flat trading week. Moving averages reducing their falling angle.

Although
not comment on the alliance front, the news was enough to booth the sentiment
in the market. Big oil players are already announcing a significant cut in
spending, as the oil price remains in the $20 handle. It is a fact that with
current oil prices, US oilfields activity will collapse.

Additionally,
as the virus continues to destroy demand, Australian refiners viva energy
(ax:vea) and Caltex Australia ltd (ax:ctx) said they expect jet fuel demand to
shrink by 80% to 90% due to air travel grinding close to a halt and plan to
take in less crude.

With
price showing enough room to fall further, the price could reach levels
previously seen in 1986 or 1998 of around $10 per barrel.

Leaving
aside the presumption of the ability to predict the market, technically and
fundamentally speaking, the carts are on the table. Let’s stay in the
“wait-and-watch” mode until further notice. Happy weekend ahead. See you next
Friday.