- WTI jumps 20%
- OPEC to cut output by 9.7 million barrels/day
- It will be a year before the market returns to pre-COVID-19 demand levels
Oil prices are rallying as producers cut production and an increase in sentiment that with the lifting of lockdowns consumer demand will grow helping the oil industry out of the crisis.
WTI oil surges 20%
On Tuesday WTI oil futures surged 20.5% which representing five consecutive days of gains. WTI oil rose to $24.56 per barrel. On the other hand, Brent crude was flat at around $30 per barrel. Over the past six days, Brent crude has been on the rise and in the last session, prices jumped 13.9% which is making investors skeptical about buying Brent crude because of the sudden surge.
The oil sector has been grappling with depressed demand over the coronavirus period and in recent weeks it has been hit with a supply glut. However, with OPEC members agreeing to slash output by 9.7 million barrels a day along with the lifting of lockdowns risk appetite is slowly starting to increase. This has also dispelled fears of the world running out of crude oil storage space.
Although it seems that the worst has passed for oil markets, analysts are warning that it will take at least 12 months before consumption returns to pre-COVID-19 levels of that will happen.
Crude oil analysis
At the time of writing WTI oil was up 3.34% trading at $25.38 per barrel. The US benchmark oil has found support at $23.90 and if it goes down it will be around $23.40. We could see a break below $23.00 levels which will present a buying opportunity around $22.40. On the other hand, we could see resistance at $24.60 with the next level being above 26.00. Bulls could see a selling chance above $28.00.
Time : 06-05-2020
Pivot : $24.02
Technical View : Long above 24.22
Target : $24.42, next 3 targets $26.02, $26.59 and $28.51
Technical View : Short below $23.82
Target : $23.62, next 3 targets $21.86, $19.82 and $17.53
Comments : Neutral
Last Price : $25.38