Oil Uptrend Confirmation Needed
The trend from May is still going up. But, expect a test of the trend at $71 and maybe a drop.
WTI's prices are still going up since early May. WTI is currently trading at $70 per barrel. There are still ongoing concerns about disruptions in Iranian crude oil exports. Some analysts predict that WTI prices will continue to rise due to ongoing tensions in the Middle East. However, there are also concerns about a potential oversupply in the market. Overall, the outlook for WTI prices remains uncertain in the short-term.
Oil prices are going up. The economy is doing better than expected. Even though there is less money available, things are still looking good.
Oil buyers had many reasons to purchase, such as a desire for risky assets and signs from the US government about refilling the strategic fuel reserve.
Last week, the price of a barrel of WTI stopped rising at $74.20. It almost hit the 50-day moving average, a trend indicator that bears aggressively defended in May.
Oil prices dropped last Thursday and are now testing support levels once again. The previous local highs had only a small amount of recovery.
Oil traders need to take into account the start of the US holiday season. The decrease in gasoline inventories has been happening steadily for three weeks. There has been a 12.4 million barrel decrease in commercial crude stocks. Stocks are up 8.4% compared to the same week last year. However, in February, stocks were above 16%. The strategic reserve sold an additional 1.6 million barrels.
Baker Hughes reported a decrease in drilling rigs. The decrease was noted in their recent report. This marks a trend of decreasing rigs. The decrease is likely due to the ongoing pandemic. Fewer rigs could lead to lower oil production.
On Friday, Baker Hughes reported a decrease in drilling rigs and Oil plus Gas count in the US. This means that producers are not increasing production. It is possible that this lack of interest is due to poor financial conditions caused by high-interest rates and emphasis on environmental protection.
Oil is facing pressure due to reports that Russia is selling diesel to Saudi Arabia, who is then exporting it to Europe. Offshore oil exports from Russia are also increasing. Despite promising to cut production by 500,000 BPD, Russia has not done so according to Saudi Arabia and the IEA.
Oil might face a new test of trend support near $71 because of some negative factors in the local area.
Bad local conditions may push oil down to a new test of trend support. The support stands at $71. If the price falls below this, bears will be victorious. This could trigger downside momentum towards $68 or even $65.
Oil may go down, but then it may go up to $74.60-$75.0.
The FxPro analyst team is made up of a group of financial experts. They provide analysis and insight on the global financial markets. They are experts in forex, shares, indices, futures, and metals. Their analysis is based on technical, fundamental, and political factors. They use their expertise to provide clients with helpful insight into the markets. They also provide live commentary and analysis during major events. Overall, the FxPro analyst team is an invaluable resource for traders seeking market knowledge.
