Yesterday, Both Brent and WTI oil have soared.
Brent crude oil rose at the highest point $36.4, more than 8% Rate of increase .
WTI up to the highest $28, more than 7% Rate of increase .
In March, the international crude oil price fell from $50 to the lowest $20, a record low. There are two reasons,
First, the global economy affected by the Novel Coronavirus Epidemic has damaged, and crude oil demand has been reduced by a quarter.
Second, Saudi Arabia and Russia did not reach an agreement at the meeting of crude oil production reduction. Saudi Arabia wants to increase oil production and increase crude oil market supply. As a result, the price of crude oil fell below $20.
Under the ultra-low oil price, Saudi Arabia and Russia are also hurt, and this situation cannot be maintained for a long time.
Saudi Arabia needs funds to complete its domestic economic transformation, Russia needs high oil prices to maintain its economy, and the US presidential election is just around the corner. Low oil prices have dashed all these hopes.
Trump said at a news conference yesterday that Saudi Arabia and Russia will soon reach an oil production reduction agreement because the current price war is not good for both sides. As soon as the news came out, oil prices soared.
If in fact, according to trump, Saudi Arabia and Russia will reach an agreement to reduce production and crude oil supply in the market in the near future,
will oil prices rise substantially?
How should investors trade next?
From the market fundamentals, even if the production reduction agreement comes into effect, under the influence of the current Novel Coronavirus Epidemic, the market demand for crude oil is shrinking, and the supply exceeds the demand, the price of crude oil is unlikely to rise unilaterally.
On the technical side, the market has experienced a one-sided slump, and it needs a period of transition and digestion. The downtrend force will fight against to the uptrend force, which has not occupied the absolute advantage at present.
To sum up, the oil price is at the end of the downward trend, and will enter the shock market.
Brent crude oil Resistance : $27
Brent crude oil Support: $22
WTI crude oil Resistance : $30
WTI crude oil Support: $25
Investors would take long positions near the price support and come out before the resistance. After shock market for a period of time (may be 2 weeks), we can try to hold long positions and wait for breakout.
If the market is as expected, we will meet a wave of unilateral big market.
Start to build a position now.