Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Since we reached our target of $68.2, my position now is to wait and watch for the next few trading sessions.
Oil has reached a two-year high price point on account of rising oil demand. Will this rising trend continue, or will we see some pullback?
Let the fireworks commence, as WTI Crude has charged ahead of $68.40 today.
U.K. traffic last week (7-day average) reached 101% of pre-Covid levels due to vaccine roll-out and favorable weather. And when road usage rises, so does gasoline and diesel consumption.
It also helped that the price-dampening news of the Iran-US nuclear deal is now on hold and is expected to be finalized in August. That gives around 3 months of time before Iran oil supply comes to the market.
The OPEC+ meeting had a major impact on oil investors’ improved sentiments. The oil cartel is optimistic about the oil demand in H2 2021 and expects global oil inventories to fall by 2 million bpd in the coming six months. Such a stance taken by OPEC+ boosted investors’ confidence.
More signals of demand boosting are coming from the US as oil inventories have fallen further this week, leading to an increase in oil prices.
Signs of oil supply crunch are showing in China as independent refineries struggle to get fuel amidst higher prices.
Oil is soaring now, and we need to relook at market fundamentals to determine the next movement.
In summary, oil prices are at a high point enabling us to hit our target levels – the trade should have provided a profit of 10% for the trading position taken. From here on, it is better to sit on the fence during the next few trading sessions before jumping back in.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Since we reached our target of $68.2, my position now is to wait and watch for the next few trading sessions.
Thank you.
Nishant Jain, MBA, CPSM
Oil Trading Strategist
