Crude Oil Still Trending Higher

The strong climb in the price of Brent crude oil, the global benchmark, looks set to continue although a near-term correction lower first cannot be ruled out.

Image Source: Pixabay

As the two-hour chart below shows, the price has already eased back from an overbought position and after advancing above $70 per barrel there should be good support there, with $75 now in sight to the upside.

Brent Crude Oil Price chart, Two-Hour Timeframe (May 20 - June 16, 2021)

(Click on image to enlarge)

Source: IG

From a fundamental perspective, oil prices have benefited from the global economic recovery after the slump caused by the coronavirus pandemic, and demand for oil is unlikely to ease off until the world’s central banks decide to tighten monetary policy to avoid a surge in inflation.

Meanwhile, the OPEC+ group of exporters and their allies show no signs yet of easing their current production restraints, and US shale producers also continue to limit supplies.

As for oil inventories, data released Tuesday by the American Petroleum Institute showed a much larger than expected fall of 8.537 million. That compares with the 3m drop expected and the previous 2.108m decline. These figures suggest that the risk for this session’s official figures from the US Energy Information Administration is to the upside; previously analysts were predicting a decline of 3.29m in inventories, a smaller fall than the previous 5.241m.