Crude oil price is on a rebound despite the uncertainties in the market. On the one hand, the prices are finding support from the steady optimism on rising global oil demand. In the past week, the International Energy Agency (IEA) indicated that demand is set to almost recover fully to its pre-pandemic levels in the coming year.
In 2021, it is expected to rise by 5.3 million bpd to hit an average of 96.4 million bpd. According to the agency, demand rose by 3.2 million bpd in June, which is about 3% below the pre-pandemic levels.
However, the agreement by OPEC and its allies has triggered concerns over whether the additional supply will dampen crude oil price. This is especially with the rising cases of the Delta coronavirus variant. Over the weekend, UK’s daily new infections surpassed the 50,000 mark, which is the highest level since January. In Singapore, the 88 additional local cases recorded on Sunday are the highest in eleven months. OPEC+ is set to increase production by 400,000 bpd monthly from August.
Brent oil technical analysis
Crude oil price is on a rebound after hitting an intraday low of 72.34 earlier on Monday. The bulls are lacking enough momentum to push the prices back above 73 amid the ongoing uncertainties in the market. At the time of writing, the benchmark for global oil – Brent futures – was down by 0.45% at 72.78. On a two-hour chart, the price is below the 25 and 50-day EMAs.
In the near term, I expect crude oil price to trade within a horizontal channel between the support level of 72.30 and along the 25-day EMA at 73.30. A move above the channel’s upper border will place the next target at the psychological level of 74 and higher at the prior resistance level of 74.47.
On the flip side, if the bears gather enough momentum to push the prices below the psychological level of 72, they will be targeting June’s low of 70.94.