KTM Commodity Weekly: Brent ran through the target

Brent crude oil soars the second week in a row, ran through the target we set in November 2020. Reduced oil supply and weak dollar pushed the spot prices to the highest since January 22, 2020. This February marked the start of Saudi Arabia’s one mib/d production cut. In early January, Saudi surprised the oil market with a cut of 1 million barrels per day of crude production starting February.

As a result, Brent is this close to the $65 mark, it’s pre-pandemic high and continuing an impressive run that climbs nearly 20% this year. The price of oil hit a record $63.40 Monday before erasing its gains somewhat. However, Brent crude oil is still up a percent this week.

Traders sent commodity prices higher as persistent dollar weakness, and the market sentiment has been changed to a broad-based global economic recovery in 2021. On the international economic front, we expect much of the recovery pace to be driven by vaccine distributions’ success. At the same time, it is probably true that much optimism is already priced into the market on a vaccine-related economic recovery.

Alexander Novak said to state television, “The last few months we have seen low volatility, which means that the market is balanced, and the prices that we see today certainly correspond to the situation in the market,” according to Interfax.

Looking ahead, traders remain focused on the OPEC+ meeting scheduled in early March. Will OPEC+ agree to cur production further? This will be a crucial question in the coming weeks.

Warren Patterson and Wenyu Yao at ING said, “Will they keep production unchanged, or will they ease cuts further? At current price levels, one would expect that a number of producers would push for a further easing, and this is the stance we would expect to see taken from Russia.”

According to the daily chart, immediate support located at $62.50 below $61.50 and $60 exists. If the price starts to move higher, watch out for resistance at $63.50 and $65. The daily RSI is standing at 79.50, the highest level since 2018 October.

View: Neutral.

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