Crude oil price rose by about 3.59% over the past week amid heightened demand. Notably, JPMorgan has adjusted its forecasted of oil demand to the upside as social mobility improves. The bank has elevated its estimates by 200,000 bpd as supplies steadily tighten in China and the US.
In the coming week, the focus will be on the OPEC+ meeting as the oil-producing countries and their allies discuss their August output policy. The coalition has only restored about 40% of the close to 10 million bpd it shuttered after the coronavirus pandemic led to the collapse of demand in 2020. Analysts expect the alliance to increase output modestly as opposed to abruptly flooding the market with the product. TD Securities’ head of commodity strategy, Bart Malek said,
“It’s very unlikely, at least from my perspective, that they are going to go flood the market with crude, open up all the spigots and collapse the price.”
India, which is the third largest consumer of crude oil in the world, has called for OPEC+ to increase production. It has cited high crude oil price as one of the key contributors of the ongoing inflationary pressures. Icra Ltd has noted that India’s demand for transport fuel is set to rise in double digits in 2022. At the same time, Saudi Arabia remains cautious of the fragile market.
Crude oil price technical analysis
Crude oil price remains on an uptrend as oil demand heightens. At the time of writing, the benchmark for US oil, WTI futures, were up by 0.93% at 73.97. Since the beginning of the month, prices have surged by about 10.57%. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages. The ascending trendline highlighted in black further substantiates the bullish outlook.
In the coming week, I expect crude oil price to extend it gains ahead of the OPEC+ meeting. After reaching 74, where it is currently whipsawing, the bulls will be eyeing the next resistance level at 75. On the lower end, it is likely to find support at 73.12, along which the prices have been whipsawing for the better part of the week.