Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Entry point at $67-$68 levels this week with a target at $72.3 and stop-loss at $64.54

Crude oil has found strong support above $70 levels with IEA expecting oil supply to fall short in the coming months. What are the implications of it?

IEA has come up with its June edition of its monthly report on oil and shared the first 2022 demand forecast. The demand is expected to surge by the end of 2022 to above pre-Covid levels of >100m b/d, urging Saudi Arabia and Russia to pump more. As per IEA – "OPEC+ needs to open the taps to keep the world oil markets adequately supplied". Clearly, a supply-driven oil market with Saudi Arabia and Russia in the driving seat will be the case in the months to come.

Oil prices are holding strong at $70 levels. Apart from the demand uptick, one of the prime reasons for this is that Iranian oil is not going to hit the market anytime soon. The Joint Comprehensive Plan of Action, known commonly as the Iran nuclear deal or Iran deal, remains complicated in terms of compliance sequence. Analysts expect oil sanctions relief to take place months after the US and Iran reach the deal: most likely in September 2021.

Furthermore, the jet fuel market is also showing signs of improvement, with flights in Europe rising 17% over the past two weeks.

For the coming trading sessions, we may see slight bullish and largely flat behavior because of profit-booking and demand rise.

In summary, oil prices have found strong support above $70 levels, as demand keeps on increasing with supply expected to fall short in the coming months.

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

Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract):

Entry point at $67-$68 levels this week with a target at $72.3 and stop-loss at $64.54

Thank you.

Nishant Jain, MBA, CPSM
Oil Trading Strategist