It’s been a breakout week for March WTI crude oil futures. Costs have eclipsed $56.00, a degree not seen in a yr. At press time (2:00 PM EST), Mar
It’s been a breakout week for March WTI crude oil futures. Costs have eclipsed $56.00, a degree not seen in a yr. At press time (2:00 PM EST), March WTI is pushing intraday highs, trying to lengthen its day by day 104 tick vary. Traded volumes have been robust, with round 275,000 March WTI contracts altering fingers.
For the whole lot of 2020, COVID-19 was the first driver of the crude oil market. Spring noticed a provide glut as lockdowns minimized demand; summer time and fall witnessed pricing power as many restrictions have been lifted. If this sample holds true, crude oil costs are attributable to spike upon a widespread financial reopening. When contemplating the next knowledge, it appears to be like like being lengthy WTI crude oil isn’t a nasty guess:
- U.S. COVID-19 Charges: Earlier this week, Johns Hopkins reported that U.S. COVID-19 day by day circumstances and hospitalizations have been down considerably. Though day by day deaths held agency above 3,000, the contagion seems to be receding.
- U.S. Oil Manufacturing: Joe Biden’s preliminary flurry of energy-related govt orders seems to have already curbed American oil manufacturing. In accordance with the EIA, the U.S. produced 100,000 barrels per day much less in January 2021 than in December 2021. Whereas not an enormous drop, that is doubtless solely the start of a politically-fuelled downtrend.
Add all of it up: demand is because of improve and supplies-on-hand are headed south. Each of those points have the potential to drive WTI crude oil to $75.00 per barrel by New 12 months’s Day 2022.
March WTI Crude Oil Futures Problem 2020’s Highs
The March WTI weekly chart beneath offers us have a look at the bullish crude oil market. At this level, it’s laborious to argue that American politics aren’t utterly driving costs larger. For the reason that Three November 2020 Election Day, March WTI crude oil has rallied from a low of $35.00 to a excessive of $56.33 ― a acquire of 60.9%.
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For now, there may be one resistance degree on my radar:
- Resistance(1): 2020’s Excessive, $57.41
Backside Line: If we see a check of 2020’s excessive within the close to future, a brief scalp might come into play for March WTI crude oil. Till elected, I’ll have promote orders within the queue from $57.38. With an preliminary cease loss at $57.56, this commerce yields a quick 12 ticks on a sub-1:1 threat vs reward ratio.