You can check out our latest comprehensive analysis of crude oil here. In it, you can read about the current factors driving demand higher.
The 17th OPEC and Non-OPEC Ministerial Meeting (ONOMM) was held yesterday, which was the catalyst for strengthening the commodity price above $68 per barrel.
As expected, the latest developments in the global economic recovery were discussed in length, as well as the current determinants of demand for energy. Another topic of discussion was the ongoing vaccination process worldwide.
The price of crude oil continues to be rallying amidst growing demand underpinned by robust global recovery. As shown on the hourly chart above, the price action successfully broke out above the upper boundary of the Re-Accumulation range (at 66.50) and is currently headed towards the 1.272 Fibonacci extension level at 69.11.
Following the breakout, the price retraced from the swing peak at 67.40 and went on to establish a throwback to 69.11 from above. This process was then repeated after the price managed to break out above 67.40 and then pulled back to the resistance-turned-support from above.
The price action remains concentrated above the 50-day MA (in green) and the 100-day MA (in blue), which serve as floating supports, underpinning the strong bullish pressure in the short term.
The 1.272 Fibonacci extension underpins the next target level for the rally. However, it should be kept in mind that the price of crude is currently trading at its highest level since before the coronavirus crash, which could cause an abrupt bearish correction near this historic peak.
However, if the price does manage to penetrate above 69.11, then the way would be cleared for a test of the psychologically significant resistance level at 70.00, which represents yet another major turning point.
In the minutes from the conference, it was stated that:
"[…] oil demand showing clear signs of improvement and OECD stocks falling as the economic recovery continued in most parts of the world as vaccination programmes accelerated. […] The Meeting welcomed the positive performance of Participating Countries in the Declaration of Cooperation (DoC). Overall conformity to the production adjustments was 114% in April (including Mexico), reinforcing the trend of high conformity by Participating Countries."
This conformity among the participating countries contributed the most to stabilising the supply-side economics of the energy market in the wake of the coronavirus crash when massive production dwarfed the greatly subdued demand in early 2020. This caused a substantial supply glut in Q2 of 2020.
With stable supply and production, and growing demand, the price of oil looks poised to continue rising, which is inlined with the expectations for the beginning of a new supercycle.