Crude Oil Price Outlook: Strength to Persist as Global Economy Expands
Crude oil price, news and analysis:
- The price of Brent crude oil, the global benchmark, has hit its highest level since April 2019 but there is no sign yet of its advance running out of steam.
- As always, there could be some consolidation first but oil prices are still trending higher on strong demand, limited supplies and falling stockpiles.
Crude oil still trending higher
The strong climb in the price of Brent crude oil, the global benchmark, looks set to continue although a near-term correction lower first cannot be ruled out. As the two-hour chart below shows, the price has already eased back from an overbought position and after advancing above $70 per barrel there should be good support there, with $75 now in sight to the upside.
Brent Crude Oil Price Chart, Two-Hour Timeframe (May 20 – June 16, 2021)
Source: IG (You can click on it for a larger image)
From a fundamental perspective, oil prices have benefited from the global economic recovery after the slump caused by the coronavirus pandemic, and demand for oil is unlikely to ease off until the world’s central banks decide to tighten monetary policy to avoid a surge in inflation.
Meanwhile, the OPEC+ group of exporters and their allies show no signs yet of easing their current production restraints, and US shale producers also continue to limit supplies.
As for oil inventories, data released Tuesday by the American Petroleum Institute showed a much larger than expected fall of 8.537 million. That compares with the 3m drop expected and the previous 2.108m decline. These figures suggest that the risk for this session’s official figures from the US Energy Information Administration is to the upside; previously analysts were predicting a decline of 3.29m in inventories, a smaller fall than the previous 5.241m.
--- 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.