Brent crude oil settled below the 20MA for the 1st time since 09 November 2020. The oil price logged five days straight fall for the 1st time since April 2020. Since the latest OPEC+ meeting and retrace 13% from early march high, Trading weaker so far since the latest OPEC+ meeting since October 2020. All these factors add up bearish layers to the Brent crude oil price in the near and medium-term.
The massive rally triggered by output cuts finally comes to an end. Now the reality checks come into play. Back in early 2020 COVID-19 crisis brought a decline in crude oil demand. During the deep pandemic times, everyone thought oil demand would be at stake in the coming years. But, things have changed very quickly than anyone forecast. However, demand may not reach pre-pandemic levels.
We have reviewed IEA’s latest oil market report. March oil report cited that “Global oil demand is set to rise every year through 2026, IEA report says, but stronger policies and behavior changes could bring a peak in demand soon.”
According to Oil 2021, the IEA’s latest annual medium-term market report, oil demand is set to rise to 104 million barrels a day (mb/d) by 2026, up 4% from 2019 levels. Interestingly IEA report says, “Asia will continue to dominate growth in global oil demand, accounting for 90% of the increase between 2019 and 2026.”
On Monday, Brent crude oil regained some of its losses Friday. Despite marginal gains, oil price recorded the worst week since June 2020. Traders are looking at 15 OPEC meetings due on 01 April 2021. In case if OPEC starts to ease the output cuts, how many barrels per day matters. At the time of preparing this, Brent crude stands at $63.75, marginally down in Asia sessions.
Immediate support exists at $61 and $60. Further weakness below $60 will open gates to $57 and $55 if the price starts moving higher than resistances located at $65 and $66.25.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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