The crude oil price had a spectacular Monday, recovering from last week’s lows. OPEC’s efforts since the coronavirus reached the Western World led to a balance between supply and demand, and now all signs point to an undersupplied market for the rest of the year.
The price of oil tested significant horizontal resistance for the entire summer. While other markets advanced considerably during the summer (e.g., gold, silver, the USD trended lower), oil faced resistance at $40. Moreover, it traded with a bearish tone, as each attempt higher led to yet another rejection. However, the consolidation led to a possible bullish pattern – a pennant.
Norwegian Strike Affects Supply
Several oil fields in the North Sea were shut on Monday due to a strike. Over 300k bpd are at risk of not being produced, and that means roughly about 8% of the daily production.
While many did not think that the Norwegian strike is a market mover, it does offset the oversupply from Libya, for instance. In other words, it tightens the supply in a market that already sees higher consumption than production levels.
Other Bullish News For Crude Oil Prices Hit the Wires on Monday
In other news from different parts of the world, the Fujairah stockpiles post a five-week losing streak. This is a world-class 1.18 billion cubic meters oil storage facility in the United Arab Emirates, often looked at as a benchmark for consumption in the region.
In Europe, Total announced that fuel retail demand in Europe is now close to last year’s levels. Finally, in Singapore jet fuel refining margins rose on strong demand.
Crude Oil Price Technical Analysis