Crude Oil Recovers on the Covid-19 Vaccine News
The West Texas Intermediate crude oil market rose a bit during Monday’s trading session. Moreover, it broke the 200-day exponential moving average (EMA). Now the market has a very high resistance at the $43.50 level. The rise would probably attract sellers, and it will try to kill a bullish movement that has had significant momentum. One of the keys is a break below the 50 day EMA that passes through the $39.75 level. It would probably send us towards the bottom of the trading range at the $36.25 level, analysts think.
Brent has shown upward pressure again, but analysts think it has much resistance above.
Over the past week, raising hopes for an effective vaccine to prevent Covid-19 has pushed up prices despite uncertainty in the market.
Recently, there has been positive news about the development of vaccines. It is likely to have a significant demand recovery for crude oil. Besides, China, India and Japan show the recovery from the economic recession caused by the coronavirus.
The buyers who have entered strongly in the last 24 hours because of that news, surely operate in the short term. Analysts think that as soon as the market fundamentals regain control, we will see sales again.
OPEC + will soon decide about prolonging oil production cuts
Meanwhile, cases of Covid-19 in the United States have exceeded 11 million, and parts of Europe have returned to quarantine. It still raises concerns about the outlook for demand. The impact of the pandemic on demand is a critical issue that OPEC Plus will focus on at its monthly meeting on Tuesday. Ministers of all the member states are going to hold a virtual meeting between the end of this month and the beginning of December. The group will decide if they are going to increase production according to the agreement or extend and deepen the current level of output. According to the agreement, OPEC planned to reduce production by 2 million barrels per day from January next year.
The reduction in OPEC Plus oil production had restored balance to the oil markets and caused US oil reserves to return to normal gradually.
Bjarne Schieldrop, a chief commodity analyst at SEB, stated that there is no denying that the oil market is entirely in the hands of OPEC Plus. The agency is the only reason oil prices are not currently trading at $20 a barrel.
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