Last week saw the crude oil price declining over 7% on a single trading day. The move lower triggered some interesting reactions in the FX market, as the Canadian dollar (CAD) pairs’ volatility increased suddenly.
The price of oil has been on a bullish trend since last year’s dip below the zero level. As the economies around the world are coming back from the recession generated by the pandemic, the demand for oil increases exponentially. However, the oil-producing countries are not increasing the supply as expected, and so the price of oil climbed back to $60 and beyond.
Global trade volume recovered to pre-pandemic levels, and so the price of oil should find support on any dip. If we add to this the vaccination pace in the United States and the advanced economies, the risk is that the economic recovery will be faster than the market expects, so the demand for oil will keep rising.
Crude Oil Technical Analysis
From a technical analysis perspective, the price of oil reversed after a triangular pattern formed above the $65 level. On its move lower, the crude oil price reached strong support at the $60 level and, while in place, we should not discard another move higher. However, bears may want to remain on the short side if the market breaks below $58 and target a move to $54 and below with a stop at $62.
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Crude Oil Price Forecast
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