Brent crude oil price nudged about 5% higher on Monday. From corn to crude, commodities are in favor of bulls. The structural bull market in the commodity market leads to higher inflation.
This year, Brent has rallied nearly 28% and closed above the 50MA on the monthly chart and 200MA weekly. We are only trading at week eight, and Brent is trading at pre-pandemic levels and Coppertops $9000 for the 1st time in nine-years.
We believe two factors are pushing the commodities higher. 1. Vaccine 2. Stimulus. On top of these, OPEC+ is meeting next week. Will OPEC+ agree to cur production further? This will be a crucial question in the coming weeks and the only risk factor for the oil price.
Looking ahead, follow the trend is a good theme for oil prices. As discussed earlier, the 100fe is at $63, which was our target price, and the cost ran through that. We are looking at 123.6 and 161.8fe at $69 and $79.50 levels- Here’s the chart.
An American multination investment bank Goldman Sachs come up with a new target at $70/bbl in 2Q21. Analysts cited in a commodity research note dated 21 February, “Demand continues to accelerate the market rebalancing”.
In the research note Goldman Sachs provided three catalysts for higher prices. They are Low inventories, higher costs, and speculative inflows.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
What is your Technical View?
Do you have a different idea? Please leave us a comment and get an answer from our professional analysts