Brent crude oil price retreat today halting a four-day rally that drove the crude oil price at one-month highs. The reopening of businesses across the globe has also increased the physical demand for crude oil as transportation peaks up. Positive sentiment in Wall Street also helps crude oil price. Results from the clinical trials for Moderna’s coronavirus vaccine increase optimism for a faster global economic recovery.
On the supply side, crude oil production cuts agreed by the OPEC countries and Russia also boosts the price. OPEC+ has cut its oil exports sharply at the beginning of May.
In the USA the crude oil rigs count has hit all-time lows as many of US oil firms have shut productions which have eased supply at Cushing, Oklahoma. The WTI June crude oil contract will expire today with analysts expecting higher volatility but nothing close to what we experienced on May expiration, as traders have opted for early rollover to next month’s contract.
The International Energy Agency (IEA) forecasts lower global stockpiles in the second half of 2020. US crude oil inventories drop for the first time the last 15 weeks; the EIA reported the previous week, a fall in US crude stockpiles of 745,000 barrels to 531.5 mb in the week ending on May 8. IEA now expects crude oil stockpiles to shrink by about 5.5 million barrels per day in the second half of 2020.
The Brent crude oil price is 2.34% lower at $34.69 halting the recent four days rally above the 50-day moving average. Brent crude oil price is over 120% higher since the April 22 lows. The technical picture for Brent crude oil improves above the 50-day moving average, but the longer-term picture remains bearish below the 100-day moving average.
On the downside, the initial support for Brent oil price is at $34.40 the daily low. Next support for Brent crude oil price will be met at $32.75 the low from yesterday. Next support zone stands at $28.50 the 50-day moving average.
On the flip side, Brent crude oil price immediate resistance stands at $35.73 the daily high. If the crude oil price breaks above $35.73, the next resistance will be met at $36.42 the high from April 9 trading session. Next hurdle stands at $43.23 the 100-day moving average.