The crude oil price had a great start to the year. It is one of the assets that gained the most during the month so far, fueled by strong demand from Asia and unilateral production cuts from Saudi Arabia.
The lockdowns in Europe and the United Kingdom seem not to affect the price of oil so far. Despite France, Germany, the U.K. and other European countries having limited mobility, the price of oil remains elevated. One explanation comes from the extreme cold this winter as energy consumption rose dramatically in consequence.
Yesterday’s inauguration of the new President of the United States starts a new cycle in American foreign policy. The country wants back in the Paris climate change deal and will probably re-evaluate its position against Iran. Changes in both areas may trigger significant changes in the price of oil as the Iranian surplus is not priced in the market.
Crude Oil Technical Analysis
The technical perspective shows the price of oil finding stiff resistance at $53.50. This usually happens in two instances – one bullish and one bearish.
In the bullish chase, the crude oil price may form an ascending triangle. On a break and close above $53.50, bulls may want to go long with a stop at the previous higher low and a 1:2 rr ratio.
In the bearish case, bears may want to short on a break and close below $52, while having a stop at the triple top area (i.e., $53.50) and a take-profit that respects a similar rr ratio of 1:2.
Crude Oil Price Forecast