Short-Term Bearish Run For Crude Oil
Last week, the OPEC+ group had to start boosting oil production by the request of the White House. It was necessary to slow rising gasoline prices that could affect the economic recovery in the world. It resulted in a problem with oil commodity itself. The boosting of oil production was criticized by the president’s administration as it supports ecology friendly movements and mostly against oil production. However, it didn’t stop them to call for more oil production.
According to the EIA predictions, crude oil production will keep on dropping over the next half a year or so. The demand for OPEC’s oil is expected to exceed production by 1 million barrels per day, but also is expected to drop to 300 thousand in the next quarter. It seems like oil most likely be supported during this inflation period simply because it remains one of the best inflation hedges.
So, the expectation is that short-term declines in prices will be caused by investors while long and medium-term uptrends will stay intact. If oil stays above its support of 65.00 USD it’s going to be alright. But of the bulls push the price above the resistance level, it could increase toward 74 USD.
However, oil needs to break above the short-term bearish trendline from previous highs and post new highs to confirm the bullish momentum. Alternatively, if the price drops below 65 USD, stop losses of long positions will be hit, which might push the black gold toward the 62.50 USD support in the initial reaction.