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Crude oil price continues to trade above the $45 level supported by vaccine news

By: Invezz
Crude oil price continues to trade above the $45 level supported by vaccine news

Crude oil remains supported by vaccine hopes, but rising Covid-19 cases and new restrictive measures could significantly reduce oil demand. The price of crude oil has advanced above $46 this November, and the current price stands around $45.

Fundamental analysis: OPEC will allow to increase output by 500K bpd starting in January

The U.S. Food and Drug Administration is likely to approve the coronavirus vaccine by the mid of December, and this could add another support to the price of oil. Pfizer applied for vaccine approvals, and the company announced that they could begin to distribute the vaccine in the United States by the end of December.

Despite this, the U.S. reported again over 200K new cases in one day, and hospitalizations in the country have been hitting records. Travel restrictions and lockdowns have already slashed demand for oil, keeping prices low as global inventories remain high.

The new restrictive measures could significantly reduce demand for oil even more, and because of this, we can conclude that there is still no clear trend for oil prices. Libya has boosted its oil production to 1.2 million barrels per day, and OPEC+ members have agreed to small production hikes in the new year.

OPEC will allow to increase output by 500K bpd starting in January because it hopes that a vaccine will significantly raise demand.

“This is a relatively small increase compared to the 9.7 million barrel reduction. Oil demand expectations are on the rise, and despite new lockdowns, the hopes are that a vaccine will significantly raise demand in the second half of 2021,” said Phil Flynn of Price Futures Group.

Technical analysis: There is still no clear trend for oil pricesData source: tradingview.com

The price of crude oil continues to trade above the $45 support level, and analysts expect an increase in oil prices for the next several months (a slow but steady rising of prices). The important support levels are $45 and $40; $ 50 and  $55 represent the resistance levels.

If the price jumps above $50, it would be a signal to buy oil, and we have the open way to $55. On the other side, if the price falls below $40, it would be a firm “sell” signal, and we have the open way to $35.

Summary

The price of crude oil continues to trade above the $45 level, supported by the news that the U.S. Food and Drug Administration is likely to approve the coronavirus vaccine by the mid of December. OPEC+ members have agreed to small production hikes in the new year because of the hopes that a vaccine will significantly raise demand. If the price jumps above $50, the next target could be around $55, but if the price falls below $40, it would be a strong “sell” signal.

The post Crude oil price continues to trade above the $45 level supported by vaccine news appeared first on Invezz.

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