The Crude oil price retreated from its recent $66.67 high as the International Energy Agency cut its demand outlook as India’s Covid-19 crises worsens.
Despite yesterday’s alarmingly high Consumer Price Index (CPI) print, the Crude price performed surprisingly well. It had spent much of the day hovering just below its recent high of $66.77.
A seemingly Bullish IEA release, showing a bigger than expected reduction in stockpiles, set the stage for the market to break out of its recent range.
Whilst the hard data was supportive, Tony Bosoni, who runs the agency’s Oil market and Industry division, capped the euphoria. Speaking to Bloomberg, he warned of the immediate demand situation, saying:
“The outlook for demand remains fragile.”
News that the colonial pipeline is to reopen has helped to ease some of the supply concerns surrounding the energy market.
OPEC Remain Upbeat
The OPEC alliance’s fairly optimistic monthly report did little to boost the crude oil price.
The Organization of Petroleum Exporting Countries forecasts oil demand to increase by 5.95 million barrels per day. They expect that continued resilience in the Chinese and U.S economy will offset the drop in demand from India.
A prolonged recovery in the crude oil price remains dependent on demand increasing in the second half of the year. OPEC reinforced this to the market:
“India is currently facing severe COVID-19-related challenges and will therefore face a negative impact on its recovery in the second quarter”.
Crude Price Outlook
The 4-hour chart shows us that the crude oil price struggles to break above a descending trend line. The trend, which is in place from the March $67.94 high, is currently capping the price around $66.60.
If the market fails to clear this level, it looks likely to retest the longer-term trend at $64.20. From the October 2020 low of $34.09, this trend line has been a good level of support over the last 7 months.
A move towards this important trend line would likely attract dip-buyers. However, a failure to hold this marker could see the Crude oil price retreat to the 22nd of April low at $60.60.
If the market can hurdle the $66.60 level on a closing basis, it would open the door to the March $67.98 high. This then puts $70.00 per barrel back within reach.
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Crude Oil Price Chart
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