Brent crude oil price jumps over two percent today on news of positive results from the first trials of the COVID-19 vaccine from AstraZeneca and Oxford University. Above that, the EU deal on the relief fund also boost confidence that the economic recovery might accelerate and the demand for crude oil would increase as the global economy will return to pre-coronavirus levels.
OPEC+ Ease Production Cuts
OPEC+ countries agreed to slow the production cuts that agreed back in April as now they are expecting a rise in crude oil demand. OPEC had agreed to ease the production cuts from 9.7 million barrels per day to 7.7 million barrels starting in August as the total OPEC oil production hit the lowest in 30 years in June. The oil output decreased by 1.89 million barrels/day in June to almost 22.27 million barrels/day. Saudi Arabia oil production declined by 1.13 million barrels/day to 7.53 million barrels/day.
However, the rising number of new COVID-19 infections in southern U.S. states might halt the reopening process, and would have a negative impact on crude oil demand.
Crude Oil Demand Forecasts
Some economists expect that global crude oil demand may not return to 2019 levels until at least 2025.
OPEC forecast, demand for its crude for 2021 will be at 29.8 million barrels per day, six million barrels higher than the 2020 level.
Brent Crude Oil Price Analysis
The Brent crude oil price is 2.27% higher at $44.17, marking the highest level since March 9 as the price breaks above the recent consolidation phase between the 40 to $43 per barrel. Now, as the crude oil price has cleared the $44 mark the next level o watch is the $48 where the 200-day moving average crosses. The technical picture points to higher levels in the short term; however, the longer-term outlook remains bearish below 448.
Looking north, minor resistance stands at $44.47 the daily top. In case the Brent price breaks above $44.27, the second hurdle will be met at $45.35 the top from March 9. Next supply area for the Brent oil stands at $48.02 the 200-day moving average.
On the contrary, the first support for Brent oil is at $43.14 the daily low. Next support for the crude oil price will be met at $42.40 the low from yesterday’s trading session. If the Brent oil breaks lower, the next support zone stands at $39.77 the 50-day moving average.
Crude Oil Price Daily Chart