Crude oil price has eased on its rally following the rise in COVID-19 cases in different parts of the world. On Monday, Brent futures were up by 0.28% at $66.88. At the same time, WTI futures dropped by 0.29% to $63.31.
Rising COVID-19 Cases
Crude oil price is on a consolidation pattern as market reacts to the forces of rising COVID-19 cases and ongoing optimism on economic recovery. Over the past week, the US recorded strong economic data including lower-than-expected initial jobless claims and improved retail sales, and a decline in oil stockpiles. The figures confirmed the country’s stable path to recovery. Subsequently, investors looking to trade oil have been optimistic about the rise in oil demand.
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However, the surging COVID-19 cases are an indication that the global oil demand still has a long way to full recovery. Firstly, President Biden’s medical advisor, Anthony Fauci has indicated that the United States is “in somewhat of a precarious position”. The remarks come at a time when the 7-day average has exceeded 60,000 new cases daily. Besides, India is now the second worst-affected country after the US with over 270,000 new infections recorded on Sunday. Japan, the third largest economy in the world, is also concerned over the probable fourth wave of infections.
In the ensuing sessions, crude oil price will be reacting to IEA’S global energy review set for release on Tuesday. Last week, the agency adjusted its estimates of global oil demand in 2021 by 230,000 bpd.
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Crude Oil Price Technical Outlook
After experiencing resistance at 60 between 5th and 13th April, WTI futures broke out on the upside to trade past 62. On Friday, it reached a month’s high at 63.91. However, it has since pulled back to its current 63.16. On a 4-hour chart, it is still above the 20 and 50-day exponential moving averages.
While the outlook remains bullish, the consolidation pattern is likely to continue in the near term amid rising COVID-19 cases. However, IEA’s global energy review and US inventories data could yield enough momentum to move crude oil price to and beyond the $64 mark.
The range-bound trading is likely to be between 63.91 and 62.45. However, a bullish catalyst will probably push crude oil price to 62. At this level, it is likely to trade sideways before gathering enough momentum to move further ahead to the next targets at 65.21 and the psychological 66. On the flip side, a move below the current support level of 62.45 will lower it to 62 and 61.