Fundamental Analysis
Demand-side factors have caused oil prices to fall in recent weeks. Coronavirus cases have been growing globally, forcing hedge funds to sell off portions of their holdings for the sixth time in eight weeks. The reappearance of cases in China, North America, and Europe has softened hopes that long-distance travel will quickly recover from the lows seen in 2020.
On the supply side, the United States is expected to boost its shale oil supply by 8.1 million barrels per day beginning next month. This would be the company's highest output since April 2020. Crude oil inventories data is also set to be released today, which will provide more information on how the demand-supply gap has changed in response to recent developments.
Technical Analysis
In terms of technical analysis, crude oil prices are still under the control of bears. This is because the crude oil price is trading below the 50 and 100-day SMA on the daily time frame. Having said that there is some hope for the bulls as the price hasn’t dropped below the 200-day SMA and this is where big buy order are sitting. In addition to this, there are also chances that the price may be forming a double bottom, a highly bullish pattern. However, if this pattern fails and the price drops below the 200-day SMA, we could see a further sell off.
The near support is at 63 and resistance is at 69.56.
