Crude oil price is hovering near its nine-month high as focus remains on the rising number of Covid cases and the vaccine rollout in the United States. The price of Brent is down by 0.75% to $49.93 while that of West Texas Intermediate (WTI) is down by 0.60% to $46.70.
What’s happening? Crude oil price has been on a strong upward trend in the past few months. This is in part due to the supply cuts implemented by OPEC and its allies. The rally is also because of the optimism brought about by the vaccine development and the accelerating Chinese economy.
Today, the price is wavering because, while we already have a vaccine, the number of Covid cases is rising. Indeed, as we wrote earlier today, London has gone back to lockdown since a new strain of the virus has emerged. Therefore, investors are worried about what this means for oil prices.
Inventories: Oil traders are also focusing on inventories data that will come out tomorrow. Generally, analysts expect the data by the Energy Information Administration (EIA) will show that inventories dropped by more than 3.5 million barrels. That will be a sharp reversal after the inventories rose by more than 15 million barrels a week before.
Oil prices technical chart
What next for crude oil price? On the daily chart, we see that crude oil price has been in a strong upward trend and is now along the 61.8% Fibonacci retracement level. It is also slightly above the 25-day and 50-day exponential moving averages and the important support at $46.45.
Therefore, the path of least resistance is higher, with the next level to watch being the 78.60% retracement at $60. This is a 20% upside from the current level.
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Crude oil price chart
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