Last week after a meeting of OPEC + nations led by Saudi Arabia and Russia agreed to a record cut of oil production to cope with the economic situation caused by the Corona virus.

However, the situation became tense when Mexico had "flip truss" suddenly refused to cut production, namely 400,000 barrels / day. At this time, President Donald Trump as a "hero" appears to save the situation, declaring that he agrees to "take responsibility" for Mexico's share will cut 250,000 barrels a day. After that, Mexico also agreed to cut 100,000 barrels / day, along with support from the US, Mexico still lacks 50,000 barrels / day to meet the requirements set by OPEC +.

Many experts believe that the US assistance to Mexico to reduce production is essentially to reduce the pressure on the shale oil industry itself, so as not to face the risk of bankruptcy. At the same time, it was also an arrow that hit two targets, a gesture of President Trump's manipulation of US shale producers, who were very supportive of Mr. Trump, so in the election. In the upcoming election, President Trump will surely need votes from these oil producers themselves.

Thus, according to the agreement from the OPEC + meeting held last week, except for Mexico, the G20 countries will agree to cut oil by about 9.7 million barrels a day, agreeing to maintain production of 7.7 million. b / d by the end of 2020, and 5.8 million by April 2022.

In fact, with such a reduction and maintenance to save oil prices plunging, this can be seen as an extremely impressive figure. But before the political tensions and the pandemic pneumonia epidemic have yet to be fully controlled, whether countries can be patient enough to sustain that is another completely different story.

With technical analysis, we can see that oil is returning to test the $ 20 / bbl zone. This shows that, although producers have agreed to cut supply, crude oil continues to fall by 30% compared to the trading session since a week earlier.

WTI OIL chart of H4 frame. Source: xStation5 do XTB provided

With the re-testing of the $ 20 / bbl area combined with information on disease outbreaks as well as the possibility that countries have no more stockpiles to store more oil, even though prices have fallen sharply, it shows if oil does not actually holding at 20 USD / barrel, history may repeat the decline to 17.5 USD / barrel, a price level that once happened. in 2001.

Not only that at H4, oil is forming a 2-peak pattern:

WTI OIL chart of H4 frame. Source: xStation5 do XTB provided

Therefore, oil can still continue to decline, even though a doji candle has appeared, but there is still no sign that oil can reverse and go up. It is likely that oil will retest the range of 19.3, which once crashed several weeks ago. So if you want to buy, consider at the area of 19, if there is a reversal candle signaling an uptrend, then it will be determined to enter the order. Otherwise, the oil fall to the 17.5 zone is very likely.

A point of note as you can see above, we used the xStation chart provided by XTB. If oil transactions can refer to XTB floor because the commodity products especially oil are not charged overnight for both buy and sell orders. With long-term trading plans, this is truly a great thing. You can refer to the following detailed review of our XTB floor to add options for yourself, okay?

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Author: Tin Nguyen

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