Oil claws back earlier losses to unchanged levels around $60.65
WTI crude was down by 1% at the start of European trading just below $60 but has clawed its way back higher on the session as traders brush aside fears of OPEC+ increasing supply at the meeting later in the week.
There is talk about OPEC+ allowing as much as an increase of 1.5 mil bpd back into the market but in the bigger picture, I don’t think this puts much of a dent in oil sentiment.
As much as OPEC+ stepping up supply is a threat to the price outlook, the global economy gradually returning to more normal conditions is also part of the consideration.
OPEC+ isn’t going to remove the production caps all at one go, so that should help ease the market into the idea that they will do so slowly and in tandem with the improving global outlook; although surely high prices do also matter.
In any case, the recent surge higher in prices may call for some unwinding in long positions but beyond that, oil remains very much supported and the uptrend is still running – as evident by the daily chart above.
Looking at the monthly picture though:
Oil still faces stiff resistance from its 100-month moving average (red line) and key trendline resistance levels at around $62.03-62 should it hold above $60.00 that is.
Those will be key levels to watch in the short-term before we head towards the start of the summer lull in 2H 2021.
However, if the global economic backdrop picks up dramatically in the second-half of the year, that might also see oil prices push higher, all things being equal.