Why Is Bullish Crude Oil Price Action Lacking Conviction? Here’s Why

Crude oil price
Crude oil price

Crude oil price on the Brent benchmark is off intraday highs at 45.76, but still higher on the day as the markets developed muted hopes of a recovery demand. These hopes were boosted by the Russian announcement of the commencement of human vaccination with the country’s coronavirus vaccine, with the Russian president Vladimir Putin stating that his daughter had also received the voluntary vaccine.

Crude oil prices marginally extended previous gains, even as the markets had cautious expectations of the passage of an enhanced U.S. stimulus package. Saudi Arabia’s national oil company, Saudi Aramco, also upped its forecast on Asia demand, with CEO Amin Nasser predicting a return to pre-pandemic highs once the global economy reopens. However, no timeline was given to back up this optimistic outlook. 

A lack of strong bullish fundamentals means that crude oil price may continue to face headwinds in the near-term. Crude oil price on the benchmark Brent crude is up 0.6% at 45.30, very close to the major resistance which currently sits at 45.39. 

Technical Outlook for Crude Oil Price

Ahead of tomorrow’s crude oil inventories report, crude oil price remains capped by the 45.50 resistance level. A look at the 4-hour chart shows the ascending trendline, which has supported price action for the past three trading days. Price is using this line as a pivot to test the 45.39 resistance. A break above 45.39 targets the 48.33 resistance. However, this move will have to contend with two possible pitstops up north. The R1 and R2 pivots (46.26 and 47.90 respectively) form these barriers. 

To the downside, look for a breakdown of the ascending trendline to open the door towards the 44.16 support. This move may also locate 43.00 and 41.43 as additional targets to the south. 

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Crude Oil Price Chart (4-hour)

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