Oil Price Fundamental Daily Forecast – Bullish Brent Rallying for Sixth Day
U.S. West Texas Intermediate and international-benchmark Brent crude oil recovered from early losses to post a small gain on Monday. Earlier in the session, prices were pressured after Iran’s oil minister said OPEC would not extend its production cap pact if high crude oil prices continued.
June WTI crude oil settled at $68.64, up $0.24 or +0.35% and June Brent crude oil finished the session at $74.71, up $0.65 or +0.88%.
Forecast
Crude oil futures are trading higher on Tuesday with Brent leading the charge with its sixth day of gains. Traders are saying the markets are being driven by expectations that supplies will tighten because gasoline and other products are rising at the same time the U.S. may reimpose sanctions against Iran and OPEC-led output cuts remain in place.
At 0810 GMT, June WTI crude oil is trading $68.98, up $0.34 or +0.52% and June Brent crude oil is at $74.96, up $0.25 or +0.33%. Brent has taken out last week’s high while the WTI contract is trading slightly below it.
According to some technical indicators, the markets are “overbought”, but that sometimes doesn’t matter in a momentum driven market that is being supported by strong fundamentals. It these fundamentals that are encouraging the hedge funds to add to established positions on price dips. The markets could surge if the hedge funds feel the need to buy strength. This would likely trigger an explosive move to the upside accompanied by high volatility.
Bullish traders have hopped on the back of the Saudis who are said to be pushing for $70 to $80 per barrel crude oil in addition to driving inventory levels back to their normal range.
Bullish factors supporting higher prices are OPEC’s efforts to tighten markets, strong demand in Asia and the reimposition of sanctions against Iran. Of course, any news that could lead to a disruption in supply will also be bullish.
The biggest factor working against a runaway bull market at this time is rising U.S. production.
We’re looking for higher markets over the near-term with periodic breaks due to overbought conditions. However, as long as the news remains bullish these breaks should be short in terms of price and time. Additionally, traders are also likely to continue to react to weekly inventories reports by the American Petroleum institute on Tuesday and the U.S. Energy Information Administration on Wednesday.
This article was originally posted on FX Empire
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