The price of crude oil has advanced from $37 above $41 in less than several days and the current price stands around $40.5. Hurricane Delta shut down most production in the Gulf of Mexico and this had a positive influence on the price of oil.Fundamental analysis: The global oil demand will return to pre-pandemic levels in 2022
The price of crude oil is again above $40 psychological level after the news that Hurricane Delta shut down most production in the Gulf of Mexico. Last week was very bullish for oil prices despite the fact that OPEC announced that global oil demand will return to pre-pandemic levels in 2022.
Demand for oil has weakened as air travel remains restricted and according to some reports the global flights were down by 26% from year-prior levels, cutting the need for aviation fuel. The airline industry needs support and it seems something will get done to make sure that happens.
Pandemic restrictions are also cutting into fuel use and it is important to mention that August oil imports in India fell 23% to 15.2 million barrels per day. The Organization of Petroleum Exporting Countries agreed the output cuts will remain in place till December and this will ultimately drive the market in the upcoming period.
Despite this, analysts stay “bullish” on oil and most of them are expecting an increase in oil prices for the next several months (a slow but steady rising of prices).Technical analysis: The price of crude oil is again above $40 psychological level
Crude oil advanced again above $40 psychological level but investors trading oil should be careful in the upcoming days.Data source: tradingview.com
On this chart, I marked important resistance and support levels. The important support levels are $35 and $30, $45 and $50 represent the resistance levels.
If the price jumps above $45 it would be a “buy” signal and we have the open way to $50. Rising above $50 supports the continuation of the bullish trend and the next price target could be located around $55.
On the other side, if the price falls below $35 it would be a “sell” signal and we have the open way to $30.Summary
Crude oil is again above $40 psychological level after the news that Hurricane Delta shut down most production in the Gulf of Mexico. The coronavirus crisis has reduced global oil demand and OPEC made a decision to limit production until December. COVID-19 cases in the US continue to rise while Europe is not faring any better with this pandemic. This is certainly not good for the economy and prices of crude oil will be connected with the global economic outlook.
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