Brent crude oil price adds to positive momentum after yesterday managed to break above the 50-day moving average. Brent crude oil price helped by the International Energy Agency (IEA) which forecasts lower global stockpiles in the second half of the year, even as worries remain for the second wave of coronavirus infections in coming months. US crude oil inventories dropped for the first time the last 15 weeks; the EIA reported on Wednesday, a fall in US crude stockpiles of 745,000 barrels to 531.5 million barrels in the week to May 8. The IEA now expects crude oil stockpiles to shrink by about 5.5 million barrels per day in the second half.
OPEC now forecasts that 2020 global oil demand to shrink by 9.07 million barrels per day, a deeper drop than its previous forecast of 6.85 million barrels per day.
Saudi Arabia announced more production cuts in June to support oil price that plunged to record lows on April as the global demand for fuel collapsed. Saudi Arabia has cut its oil production by 7.5 million barrels per day, almost 40% lower form April production.
Meanwhile, the Commodities Futures Trading Commission (CFTC) warned traders that they should be prepared for high volatility and may be negative prices in futures for specific expirations.
Analysts expect the physical demand for crude oil to pick up as more and more people return to their jobs, and more businesses reopen.
The Brent crude oil price is 0.84% higher at $31.63, making fresh monthly highs and as the positive momentum accelerates above the 50-day moving average. Brent crude oil price is over 100% higher since the April 22 lows. The technical outlook for crude oil is positive now for the short term, but the longer-term outlook remains bearish below the 100-day moving average.
On the upside, crude oil price immediate resistance stands at $32.48 the daily high. If the crude oil price breaks above $32.48, the next resistance will be met at $36.42 the high from April 9 trading session. Next hurdle stands at $39.74 the high from March 11.
On the other hand, the initial support for Brent crude oil price is at $30.92 the daily low. Next support for crude oil price will be met at $28.50 the 50-day moving average. The low from May 4 session at $25.61 will provide the next critical support zone.