Crude oil prices rallied on Thursday reaching the $25 levels on optimism that parts of the US economy could reopen from coronavirus lockdown earlier than anticipated. This comes after President Trump issues guidelines on the reopening although the exact timing is still not certain.
OPEC move to cut production yet to ease demand concerns
The black gold could be headed for another gloomy week despite OPEC+ agreeing to cuts production. There is still suppressed demand for oil globally due to the coronavirus pandemic that has resulted in lockdowns across the world. OPEC has reviewed its 2020 oil demand forecast and warned that there is a likelihood of further revisions. The cartel now expects global demand to reduce by 6.1 million barrels/day after it previously predicted a modest increase.
The market is still skeptical despite the agreement to reduce production as that has not alleviated demand issues. Oil prices have been hovering around $20 having hit new lows in years. With global weakness expected there is a possibility that crude oil will continue experiencing selling pressures on any slight rally.
Crude oil analysis
Currently, crude oil may be holding to resistance levels of $24.63 per barrel but it appears the black gold is holding towards the $20 level with time. This is because there are still issues with global demand as most countries are still under lockdown. A surge above the level might seem like a strong bounce but that means that it will be subject to more selling pressure.
Oil has currently formed support levels at $23.83 has already dropped below the level before when it tested the $19.20 mark. It seems like the prices will not move above resistance levels which means a reversal could be imminent. If this happens and crude oil moves lower then it is likely that it will form fresh lows unless there is a surge by end of Friday to avert a drop. However, anything less than a push higher could see oil dipping below support levels.