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The price of crude oil continues to trade above the $70 support level even though the Baker-Hughes weekly rig count rose. The vaccination programs will allow more people to travel this summer; however, concerns over new coronavirus in Britain signal that a battle against the pandemic is still not over.
Fundamental analysis: The weekly Baker Hughes oil rig count saw an 8-rig increase to 373
The weekly Baker Hughes oil rig count saw an 8-rig increase to 373, but OPEC expects a stronger oil demand recovery in the second half of this year. The global business activity is recovering; increasing vaccinations together with government spending will drive higher growth and keep the market stable.
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“Despite a complete return to pre-pandemic life in the U.S., energy companies are cautious over keeping their balance sheets in order and will remain disciplined over making commitments over new wells. The oil market does not have to worry about oversupply concerns anytime soon, and that is keeping crude prices supported despite a broad selloff with commodities,” said Edward Moya, senior market analyst at OANDA.
The U.S. dollar has a big influence on commodities as well, and those whose interest is to invest in commodities like oil should also have this currency on their “watch list.” Oil demand is recovering from pandemic lows, and the price of crude oil remains supported even as the U.S. dollar continues to appreciate following the Federal Reserve announcement.
The U.S. Federal Reserve had a monetary policy meeting last week and left the interest rate unchanged but switched to a more hawkish tone. Seven Fed officials expect hikes in 2022 because inflation accelerated faster and could be more persistent than expected.
The prospect of rate hikes also weighed on the longer-term growth outlook; still, the future performance of oil prices is likely to depend on OPEC decisions. On the other side, the global COVID-19 pandemic still poses downside risks to the recovery, and new coronavirus in Britain signals that a battle against the pandemic is not over.
The negative news is that Iranian crude supplies could return to the market, and if this happens, the crude oil price will probably be at lower price levels.
Technical analysis: Bulls remain in control of the price action
Crude oil continues to trade above $70 support; still, if the price falls below $68, it would be a firm “sell” signal, and the next target could be around $65. The first resistance level stands around $73, and if the price jumps above this level, it would be a signal to trade crude oil, and we have the open way to $75.
For now, the positive trend remains intact, and rising above $75 supports the continuation of the bullish trend for crude oil.
Summary
The price of crude oil continues to trade above the $70 support level even though the Baker-Hughes weekly rig count rose. For now, the positive trend remains intact, but if the price falls below $68, the next target could be around $65.
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