Oil
The futures of Brent crude settled at $74.28 a barrel, rising 18 cents, while futures of WTI crude settled at $72.12 per barrel, increasing by 5 cents. The spread of the Delta variant has investors fearing a decline in demand for oil if lockdowns are put in place again.
Furthermore, a tightening of controls by Beijing on the abuse of import quotas, combined with the impact of high prices, could send China's oil imports—the world's largest importer of oil—spiraling downward to their lowest level in 20 years.
On the other hand, despite the rise in production by OPEC+ countries, oil supply is likely to remain tight because the increase in production is insufficient to offset the expected rise in demand if all goes well and there is no significant change caused by a spike in COVID cases. Investors should keep an eye on data on oil inventories to gain a better understanding of how oil prices may fluctuate in the short term.
Technical Analysis
In terms of technical analysis, oil prices have crossed above the 50-day MSA on the daily time frame which is positive in terms of bullish momentum. In addition to this, the 100-day SMA is also trading above the 200-day SMA and the 50-day SMA is trading above the 100 and 200-day SMA—a bullish set up. As long as the price continues to trade above these moving averages we are likely to see more higher moves for crude oil.
