Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Long positions with entry at $63-63.5, with $59.7 as a stop-loss and $68.20 as the initial price target.

Oil prices have found solid support at $66 levels within a week after falling by about 5% on the Iran-US deal news. Are price dips an opportunity to double down?

The market is looking currently for signals for the next rally, and it may find it in the dropping oil inventories in the US. As per the latest report from EIA, US crude inventories fell by 3.308mb last week. It is a good sign for the oil market, as it signals a fast-recovering demand which forced the usage of inventories.

So, oil demand in the US is increasing more than expected. The demand of distillates specifically is very strong for this time of the year, indicating strong usage in road and airways transport. Some analysts are expecting that summer demand for gasoline in the US could top even 2019 demand, and it will not be an exaggeration. In another update, TSA prepares for peak summer travel demand as they are hoping to see a tremendous re-emergence of domestic travel.

Covid-19 cases are steadily declining in India and Japan, and we may start seeing an upward oil demand from these nations by the end of June. Coupled up with demand from the US and China, the situation of high demand and restricted supply can develop quite fast, putting upward pressure on prices.

In summary, rising demand from the US and Europe strongly supports the bullish outlook, and Covid-19 recovery in Asia can add to the black gold’s potential of upward price movement.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Long positions with entry at $63-63.5, with $59.7 as a stop-loss and $68.20 as the initial price target.

Thank you.

Nishant Jain, MBA, CPSM
Oil Trading Strategist