The crude oil price recovery from the April meltdown is nothing short of impressive. It bounced back to $40 on joint efforts from OPEC plus friends (i.e., other oil-producing countries, including Russia) to control production.
Now that the world recovers somehow from the COVID-19 economic recession, demand for oil products is set to rise. Moreover, new trends emerge as a result of a change in consumer behavior.
Cautious Tone About Oil Market’s Outlook
The OPEC-JMMC meeting ended with a cautious tone about the future oil market’s outlook. The oil-producing countries vowed to keep fighting for price stability and to keep speculators at bay. The statement, for that that had the chance to read it, sounded more like a warning against those that do not trust the members’ determination to fight for crude oil price stability.
The cautious tone comes as a natural conclusion. However, some interesting developments take place around the world, suggesting the oil market is undersupplied going into the end of the trading year.
Strong Chinese Economic Recovery
The recent Chinese GDP shows a strong bounce for the third quarter. Not only that the Chinese economy continued to grow, but it fully reversed the decline in the first quarter. Coupled with the second quarter’s growth, the Chinese economy now fully recovered the coronavirus dip and is poised to grow at a consistent pace in 2020.
U.S. Retail Sales Reveal Strong Demand for Cars
Last Friday’s retail sales in the United States revealed a shift in consumer behavior. One of the purchased goods were cars and other automotive parts. It reflects the reluctance of the consumer to use public transportation, and such trends are seen all over the world.
Crude Oil Price Technical Analysis
The crude oil price consolidates in a horizontal pattern. It looks like a pennant, and a clear break above $45 brings the possibility of a long trade for the measured move. However, the rise should be gradual, full of uncertainty, as the COVID-19 recovery is.