The crude oil price is advancing this Tuesday after the news that OPEC could allow boosting oil output slightly from May 1. The price of crude oil continues to trade above the $60 support level, but rising Covid-19 cases and new restrictive measures in some parts of the world could significantly reduce oil demand.Fundamental analysis: OPEC could allow boosting oil output despite the situation in India
The crude oil price is advancing after the news that OPEC could allow boosting oil output slightly from May 1. This suggests that OPEC expects a stronger oil demand recovery in the second half of this year.
Still, the Organization of the Petroleum Exporting Countries plans to hold a full ministerial meeting on Wednesday because there are also some concerns about surging COVID-19 cases in India. OPEC keeps its oil demand forecast unchanged for now, but new lockdowns worldwide and concerns over fresh COVID-19 outbreaks in India represent a problem.
India is the world’s third-largest crude importer, and a rise in infection numbers poses downside risks for the oil demand recovery.
“The possibility that increasing OPEC+ production could be intersecting with weakening Asian oil demand suggests a possible end to the reduction in the global oil supply surplus that has been supporting the complex during the past year,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Concerns over the pace of vaccination campaigns in many parts of the world still represent an issue; shops, cafes, restaurants are closed in many countries, and the global battle against the coronavirus continues.
The EU has vaccinated less than 14% of the population, and economic sentiment contracted as another coronavirus wave weighed on local businesses. ING Economics expects that OPEC will not change its plan this Wednesday even though there are some concerns around the demand outlook.Technical analysis: $60 represents a strong support levelData source: tradingview.com
Crude oil is advancing this Tuesday, still, if the price falls below $60 support, it would be a firm “sell” signal, and the next target could be around $58. The first resistance level stands around $65, and if the price jumps above this level, it would be a signal to trade crude oil, and we have the open way to $70.
For now, the positive trend remains intact, but new lockdowns worldwide and concerns over fresh COVID-19 outbreaks in India represent a problem for the crude oil price.Summary
The Organization of the Petroleum Exporting Countries could allow boosting oil output slightly from May 1 despite concerns about surging COVID-19 cases in India. OPEC forecast a stronger oil demand recovery in the second half of this year, but the global COVID-19 pandemic continues to pose downside risks to the recovery.