Crude Oil Latest: Brent Crude Price May Rise Further After Breach of $50 Level
Crude oil price, news and analysis:
- After climbing above the psychologically-important $50/barrel mark last Thursday, and staying close to it since then, the price of Brent crude oil looks to have made a decisive break above $50 and is therefore well placed to advance further.
- In a sign of underlying strength, traders have shrugged off news of an unexpected build in US crude oil inventories; data that might have been expected to have prompted a price drop.
Brent crude oil price well placed to advance further
The Brent crude oil price, seen as the global benchmark for the commodity, looks to be heading still higher after rising above the $50/barrel mark on December 10, consolidating around that level and then making what looks like a decisive break to the upside.
Brent Crude Oil Price Chart, Four-Hour Timeframe (October 15 – December 16, 2020)
Source: IG (You can click on the chart for a larger image)
As the chart above shows, the price of Brent crude is now more than two-and-a-half times the low of $18.99 touched on April 22 – rising steadily on hopes of greater demand for oil when the global economy recovers from the downturn caused by the coronavirus pandemic.
Crude oil inventories rise
In a sign of underlying strength, there was little response to news yesterday that the American Petroleum Institute’s measure of US crude inventories showed a build of almost two million barrels rather than the 3.5 million drawdown predicted by analysts. The official US Energy Information Administration data are due later this session and the forecast is for a drawdown of 1.937 million barrels.
Reports have suggested that there is currently strong demand from China and India for physical oil. However, the International Energy Agency cut its oil demand estimates for 2020 and 2021 yesterday despite the rally in crude futures, blaming looming uncertainty over the efficacy, availability, and deployment of the Covid-19 vaccines. This, it said, will keep oil demand weak in the short term.
The agency admitted, though, that stronger Asian demand and persistent and effective OPEC+ supply management had aided the recovery in oil prices and on the physical oil markets.
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.