Oil bulls are currently rallying strongly on reports revealing an improved outlook for energy demand in key international markets coupled with increased COVID-19 vaccinations further boosted market confidence at the most liquid commodity derivative market.
At the time of writing this publication, the British based oil contract, Brent crude, broke above $73 a barrel posting gains of about 0.3%, after gaining more than 1% last week and hitting the highest price levels since May 2019.
In addition, the U.S. West Texas Intermediate futures also posted gains of more than 0.2%, to trade at around $71 a barrel, after reaching the highest price levels since October 2018 while posting gains of nearly 2% for the past week.
Present market sentiments reveal the bulls call the shot, as oil prices resume their positive moves by Monday’s open, moving away from the $73.00 barrier in the case of Brent crude, reinforcing the expectations of achieving more gains in the coming days as vehicle traffic and air travel return to pre-pandemic levels at many emerged markets, driving three weeks of gains for the oil benchmarks.
Though it remains to be seen if the bulls present firepower can break the strong resistance level of $75 a barrel with the resurging viral attacks biting hard on India, the third largest importer of crude oil.
On the other hand, market commentators further anticipate a drop of oil prices below the $72.5 will pause the expected rise and press on oil prices to start a correctional bearish wave on an intraday basis.
However, such drop seems unlikely, taking to account Goldman Sachs, expects the slow progress in negotiations surrounding the Iran nuclear deal weighing hard on oil supply, thereby supporting the price of the black viscous hydrocarbon at least for the mid-term.
Also, comments from the U.S. Secretary of State Antony Blinken that buttressed a significant number of sanctions remaining in place despite Iran’s expected compliance on the nuclear deal, arbitrarily burnt the hopes of oil bears riding on awash market supply for the long haul.
For a look at all of today’s economic events, check out our economic calendar.