The crude oil price continues its consolidation in a tight range. It currently hovers around the $40 level, just like it did for the past seven weeks or so.
OPEC meeting takes place all day today, but nothing new is expected to come out to impact the crude oil price. Together with Russia, OPEC members meet today to review compliance with the oil cuts plan and make sure that all parties stick to the plan. The idea is to support oil prices during the pandemic and while the global economy recovers.
Speaking of global oil demand, OPEC has forecasted that the world’s global oil demand for the following year will reach 7 million barrels/day. It remained stable from a month ago and explains the inactivity in the crude oil price.
Crude Oil Price Technical Analysis
Crude oil price made history in April when it closed below zero. It shows the complexity of the future market but also how fragile the supple and demand balance is. In other words, as the world economies stopped, global oil demand disappeared overnight, and producers did not find anyone to pick up the barrels. In a way, negative oil prices made sense, as producers were willing to pay for their goods to be picked up.
The bounce from the lows is nothing short of remarkable. The recent consolidation during the past weeks takes place at previous support turned into resistance. In other words, the price can break either way.
Bulls would want to see some strength before going long. Buying into a move above $44 makes sense with a stop loss order at $39 and targeting $50. If that happens, it means that the consolidation broke higher as a running triangle, pointing to pronounced strength.
Bears, on the other hand, cannot think of anything else but a rising wedge forming against divergence. If that is the case, wait for the price to break $39 before going short for $30 with a stop loss at $43.