The crude market saw a much quieter period of trading this week.
Price remained in a block of consolidation just beneath the recent highs. The weakness in the US dollar over Q4 of 2020 saw the crude market expanding over 50% to the recent highs.
While bullish momentum has paused, for now, the outlook remains firmly bullish in the near term.
EIA Report Due Today
The Energy Information Administration has reported three consecutive weeks of drawdowns in US crude stockpiles.
This run of declines is forecast to have continued last week with the market looking for a more than 1 million barrel decline in headline crude stocks.
The weekly update will come out over the US session today. This follows an adjustment to the US schedule after the US federal closure for President Biden‘s inauguration.
Crude demand has been steadily improving over recent months despite the continued intensification of the COVID second wave.
With the majority of the US having remained open, and with vaccinations now underway, crude bulls are hoping the market can avoid the sort of a correction lower seen over Q3 last year.
Buoyant Risk Appetite Supporting Oil
The rally in equities markets and the broader risk complex is helping to keep oil prices supported.
Equities received a boost from expectations of forthcoming US stimulus. President Biden’s $1.9 trillion package would include $1 trillion in direct aid for US citizens.
With US stock markets at all-time highs and the US dollar under pressure, crude prices look likely to continue higher in the short term.
Vaccinations Key To Oil Demand Outlook
The key thing for oil prices now will be the progress with the global vaccination effort.
Given that many countries are still in lockdown, there is an urgent need to see tangible progress with the vaccines. This is necessary to keep hopes of recovery over h2 alive.
Both the US and UK governments continue to reaffirm that they are on course to end lockdowns by Q2. So long as this remains the case, oil prices should stay supported in the near term.
Bull channel Continues
Crude prices continue to trade within a tight bullish channel as price approaches the 54.48 level resistance.
With the bearish trend line overhead, this is a key area for bulls to break.
Any correction lower from here will turn focus first of all to the 49.30 support, with the bull channel low in the area also. Below that, the next support to watch is the 43.88 level.