Brent crude oil prices have soared 23% in February to hit the highest levels since January last year.
Fundamental analysis: BofA raises outlook
Bank of America (BofA) Global Research raised its outlook for Brent crude prices for 2021 on the back of decreased supplies as a result of Texas freeze and OPEC+ production cuts, as well as the unprecedented monetary stimulus from global central banks.
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BofA’s new forecast expects Brent crude oil prices to average $60 per barrel this year, compared to the previous forecast of $50. Moreover, the bank expects West Texas Intermediate (WTI) crude prices to average $57 a barrel this year.
In a note sent to clients, BofA’s analysts said Brent prices could rise to as much as $70 a barrel at some point in the second quarter of the year.
Oil prices have moved higher thanks to the easing of coronavirus-induced lockdown measures around the world, as well as weaker output as American supplies failed to rebound following the freeze in Texas shut down crude output.
“The big Texas freeze in the past week should reduce global inventories by an additional 50 million barrels, further supporting (oil) prices,” the bank said.
Furthermore, the BofA said that further production cuts in Saudi Arabia in February and March and OPEC+’s decision to maintain steady production were supportive as well.
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Technical analysis: Resistance level hit
Brent crude oil price is up 23% in February as the bull trend, which has started in November, continues to yield dividends for buyers. Brent crude oil price has now nearly doubled since the bull trend has started.
The price action has hit a 100-MMA, which will offer crucial resistance for oil traders going forward. It last touched this indicator back in October 2018, prompting a rotation lower. The price action didn’t close above the 100-MMA since moving below it in 2014. The 200-MMA comes at $74.00 in case $68.00 gives way.
BofA lifted its forecasts for Brent crude oil prices this year, due to the deep freeze in Texas, output cuts by OPEC+, as well as unprecedented monetary stimulus around the globe. In the meantime, Brent crude oil prices hit a 13-month high.