Crude oil price struggling at $50 resistance. Here’s the next target for buyers
- Crude oil advanced last week to nine-month highs, which was seven straight weeks of gain
- OPEC hopes that a vaccine will significantly raise demand
- If the price jumps above $50, the next target could be around $52 or even $55
The price of crude oil has advanced above $49.25 last trading week, and the current price stands around $49. The U.S. lawmakers announced they reached a compromise on a $900 billion coronavirus relief package over the weekend. Still, travel restrictions and lockdowns could keep demand for oil at low levels for a long time.
Fundamental analysis: Analysts stay “bullish” on oil
Oil price advanced last week to nine-month highs as investors wait for a U.S. coronavirus relief package. Over the weekend, the U.S. lawmakers announced they reached a compromise, and a $900 billion coronavirus relief package could be on the way.
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Another positive news is that OPEC announced that it would allow increasing output by 500K bpd starting in January. OPEC hopes that a vaccine will significantly raise demand, but it supports the market by slowing the pace of a planned increase in supplies next year.
“We see a gradual return to pre-COVID oil demand levels, followed by strong demand growth in the middle of the decade before it gradually decelerates. All of our efforts, including by far the deepest supply adjustment ever made, have led to the greatest stabilization commitment in oil market history, both in magnitude and duration,” said Mohammad Sanusi Barkindo, OPEC Secretary General.
This was seven straight weeks of gain, and it is essential to say that a decline in the U.S. dollar also helped crude oil prices to advance at current levels.
A weak dollar makes oil and other commodities cheaper for buyers, but it is also important to mention that the weekly U.S. supply data showed that crude inventories fell more than expected. “The dollar’s weekly decline is a significant move down and is pushing the oil complex higher,” said John Kilduff, partner at Again Capital LLC.
According to analysts, strong bullish sentiment is also boosted by vaccine hopes as more countries give the green light for vaccination, but the pandemic will not stop in the upcoming months. The U.S. still needs to face the COVID-19 challenges, and the country reported over 250K new coronavirus cases in the last 24 hours.
The pandemic is also out of control in the rest of the world; travel restrictions and lockdowns could keep demand for oil at low levels for a long time. This is certainly not good for the economy and prices of crude oil, but despite this, analysts stay “bullish” on oil, and most of them are expecting an increase in oil prices.
Technical analysis: Crude oil price advanced to nine-month highs
The important support levels are $45 and $40; $50 and $55 represent the resistance levels. If the price jumps above $50, it would be a signal to trade crude oil, and we have the open way to $52 or even $55.
On the other side, if the price falls below $45, it would be a firm “sell” signal, and we have the open way to $40.
Oil price advanced last week to nine-month highs, but travel restrictions and lockdowns could keep demand for oil at low levels for a long time. The pandemic is still out of control, but analysts stay “bullish” on oil despite this. If the price jumps above $50, the next target could be around $52 or even $55.