Oil Clears Way for Growth Above $90
FxPro Financial Services Ltd | Apr 02, 2024 06:27AM ET
Oil prices have been hitting five-month highs, and every trading session has been rising since 27 March. The price of a barrel of WTI reached $84.6 at the start of the day on Tuesday before retreating slightly by midday in Europe.
To some extent, oil is managing to copy gold, which has also seen a steady increase in buying since the beginning of last week. The latest rally can also be attributed to signs of acceleration in China and continued strong manufacturing data from the US, which promises energy demand.
Contrary to common logic, oil prices are rising simultaneously with the dollar despite historically having a negative correlation. But America has commonly been the largest energy importer, consuming a quarter of all Crude in the early 2000s. In recent years, however, the US has become a net Crude exporter. Last year, it reclaimed the title of largest oil producer. Recently, it became the largest exporter of LNG, a formidable competitor to the OPEC+ countries.
Meanwhile, the states have maintained production at 13.1 million bpd since October last year. Drilling activity has also stagnated for all these months, barring any supply spikes in the coming quarters.
All of this argues for further price growth and methodical, albeit small, additions to the strategic reserve.
The price chart clearly shows the acceleration in growth since the second half of March, when the previous upper boundary of the rising channel turned into support last week. We are also watching for the formation of a "golden cross", which could attract additional speculative buying in the coming days.
From a technical point of view, the only barrier for oil is the area of previous highs at $92.5. Approaching this area may require significant profit-taking and prolonged consolidation before the next breakout, but success is by no means guaranteed.
The FxPro Analyst Team
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.