Oil prices fell around 30% on Monday, with U.S. oil heading for its biggest loss on record after Saudi Arabia slashed prices and set plans for a dramatic increase in crude production in April.
Russia has just sparked what may end up being among the ugliest oil price wars in recent history. And Saudi Arabia is firing back. As the two oil superpowers face-off, American oil companies may end up as the biggest victims.
Russian President Vladimir Putin announced on Sunday that present oil prices were sustainable for the Russian economy. Adding that Russia had the tools to react to any adverse results of the spread of the coronavirus on the global financial climate.
“I want to stress that for the Russian budget, for our economy, the current oil prices level is acceptable,” Putin explained in a meeting with Russian energy officials.
Now some oil analysts are anticipating barrel prices as low as $20 within the year. Some experts have suggested that Russia’s move is intended to counter U.S. shale producers and hit back against the U.S. for targeting the Nord Stream 2 gas pipeline connecting Russia and Germany.
Saudi Arabia blasted back, in kind. Sunday morning, Saudi Arabia dropped its own oil weapon. Its latest plans will not only reduce its unrefined price to Chinese consumers by as much as $6 or $7 per barrel, but it is also reportedly looking to increase its daily unrefined output by as much of as 2 million barrels per day into an increasingly oversupplied international market.
The shocking move by the Saudis is both a market share grab as well as a loud signal to Moscow that it is finished playing games.
Brent crude futures were down $13.29, or 29%, at $31.98 a barrel by 0433 GMT, after earlier falling to $31.02, their lowest since Feb. 12, 2016. Brent futures are on track for their biggest daily decline since Jan. 17, 1991, at the start of the first Gulf War.
Big bearish breakout followed by a big plunge.
The price clearly broke the key confluence support zone 50.50 – 49.00 and formed a huge historical “waterfall” as we were expecting (check our live trading sessions). Well, our analysis confirmed the fundamental part and we went short on oil last week as most of the traders based on fundamental analysis lost a lot. The reason is that they trade the expectations and not the facts – price is going down!
The price says everything! If you want to know how we trade every situation on the markets, how we prepare, what we’re looking before start trading and how we manage our trades, join us on our TradeRoom and get our trade ideas with detailed trading plan and position management, also you will benefit a lot from our super-fast update on every trade we take.