Technical analysis update: USOIL (27th July 2021)

WTI oil continues to trade around 72 USD per barrel. Recently OPEC deal cleared out uncertainty about future supply boosts in the oil market. Despite initial selloff as reaction to the announcement of a deal we view this agreement among OPEC as bullish developement for medium and long term price of oil. Rising vaccination rates are leading to higher mobility in the U.S. and Europe. Higher mobility and less lockdowns subsequently hint to higher demand for oil in the near future. Earlier this year OPEC announced that it expects oil demand to rise by 6 million bpd this year. In addition to that IEA announced that it expects oil demand to rise by 5.4 million bpd this year and by another 3.1 million bpd next year. Though, pre-pandemic levels of demand (approximately at 100.6 million bpd) are expected to be reached by end of 2022. This points to the fact that oil market recovery is still in the progress and has plenty of room to continue. RSI and MACD are flattening out and becoming neutral. Stochastics is bullish. ADX contains low value suggesting weak or no trend. Our medium term price target is 77.50 USD per barrel and our long term price target for oil is 80 USD per barrel.

Developements from 20th July 2021:

Here we stated that price was very attractive for taking entry on long side of the market (price traded at 66.57 USD at time of publication). Then price rebounded back above 70 USD per barrel and continued further above 72 USD per barrel.

Disclaimer: This analysis is not intended to encourage buying or selling of any particular securities. Furthermore, it should not serve as basis for taking any trade action by individual investor. Your own due dilligence is highly advised before entering trade.

Comment:

Yesterday American Petroleum Institute announced a draw in crude oil inventories of 4.728 million barrels for the week ending July 23 versus expected draw of 4.333 million barrels.