Crude Oil Price Gains May Be Overdone as Short-Term Risks Remain
Crude Oil Price Analysis & News
- Oil Extends Gains on API Drawdown
- Short Risks Do Remain with Upside Somewhat Exhausted
Vaccine Prompts Oil Rally: The COVID vaccine breakthrough has been a significant development for the initial outlook in the oil complex with both Brent and WTI crude futures so far posting a 13% rise this week. In turn, Brent has hit a 10-week high having briefly broken above $45 with gains also exacerbated by a bout short covering. Elsewhere, API crude oil inventories saw a 5.1mbpd drawdown against expectations for a 900kbpd drop keeping oil prices buoyed throughout today’s session, which also follows on from reports by the EIA that US crude production is expected to show a larger drop than previously expected.
Rising Libyan Production: However, while recent developments have been very encouraging for the oil market, there are still concerns in the short-term regarding lockdown risks across Europe, while rising Libyan oil production is a risk on the supply front which is now reported at 1.1mbpd and now looks on course to rise to 1.3mbpd by the end of the year. That said, there is a risk in chasing oil prices higher from current levels.
Brent Crude Technicals: Initial topside resistance is situated at 45.18, which represents the OPEC price war gap. While a break above puts 45.50-55 in focus, given that gains look somewhat exhausted short term risks are for a pullback towards 44.50 initially before a retest of the 44.00 handle.
Brent Crude futures: Daily Timeframe
Daily Brent Crude Pivot Points
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