Crude Oil Markets Continue to go up

The WTI crude oil market started backing down in Thursday’s trading session but then rocketed upward to its highest record in the previous session. The commodity may go up to a level of $41. Besides, the 200-day exponential moving average (EMA) is just above that level and will offer very high resistance. 

Analysts think the volatility is going to be high, but the differential hasn’t been filled in yet. That will surely attract many traders who will try to complete that pattern in the short term. Short term corrections are likely to continue to provide us with profitable buying opportunities.

At Thursday’s trading session, the Brent oil markets have shown that there is support at the $40 level. The prices will likely rise. Also, there is support below the 50-day EMA, along with the level at $36.44. The oil prices will have to rise to a level of $45 to allow an upward fill of the differential. The 200-day EMA is approaching that region, so analysts think that there will be very high downward pressure when prices get to that area. If everything remains the same, oil rates will go upwards in the short term, but then there will be a correction. In general, both markets are trying to establish a kind of range of movement. Right now, we are exploring what the higher levels may be.

For how long can China sustain the crude market?

China’s oil imports hit a record high in May, while refinery output rose to near-peak levels. This suggested a strong recovery in oil demand following the coronavirus outbreak.

In March and April, when other countries were blocked, China helped the weak global demand for oil.

Oil demand in the country is picking up, but China increased its crude reserves this year. 

Last month, the country imported a record of 11.34 million barrels a day of crude oil. While part of the record imports was due to the pickup in economic activity, the other driver was the meager April oil prices. These rates encouraged the build-up of strategic and commercial stocks of crude oil in China.

China accumulated crude oil at a rate of 1.88 million BPD between January and May, an increase of about 670,000 BPD compared to the 2019 rate of 1,21 million BPD.  

Since China does not report inventories, analysts are guessing that crude is heading to the storage, based on imports and domestic production minus refinery yields.

China’s reports are concealed, or non-existent. In terms of storage availability and inventories, no one knows how long China could keep its record fill rates.