- Oil prices on the rise after dropping in the previous session
- WTI oil up 4.8% on Friday
- Production cuts have helped alleviate storage problem
On Thursday afternoon, oil prices dropped as the sentiment that had supported the prices previously started to wane. Early in the session, oil prices rallied after Saudi Arabia increased its selling price, optimism of oil producer cutting output, and the prospect of demand growing as lockdowns ease.
Oil prices gain on optimism of growing demand
Oil prices have received support from the easing of coronavirus lockdowns, and there is a belief that demand for oil will grow as people return to work. In the US, there are signs of oil demand rebounding, and producers have also slashed production by around 1 million barrels/day in the past few weeks. For instance, EIA is predicting that US shale producers will cut production in May over April by 183,000 barrels per day.
The production cuts will deal with the supply glut that had hit the industry that was staring at a storage crisis. For instance, by the end of January, out of the 6.7 billion barrels of global oil storage capacity, around 63% of it was already utilize, leaving only around 1.2 billion barrels of storage space.
Crude oil analysis
WTI oil surged 11% to $26.74 before shedding 1.83% to settle at $23.55/barrel. On the other hand, international crude benchmark, Brent crude, dropped to $29.46/barrel. However, WTI oil is still up 19% this week. On Friday, WTI oil gained 4.8% to $24.67 while Brent crude is up 3% and currently trades around $30.33.
Time : 08-05-2020
Pivot : $24.51
Technical View : Long above $24.71
Target : $24.91 next 3 targets $26.21, $28.32 and $29.88
Comments : Weak Bullish
Last Price : $24.67
WTI oil is up 40% this month, and there is some skepticism that the rally might have come to an end because of storage issues across the globe. Change in market sentiment lifted prices this week, but there are lingering issues that could result in a pullback.