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Andreas Zanin
Analysis | March 30, 2021

KTM Commodity Weekly: Raising the nose again

Crude oil has reaffirmed support since last week. The daily Relative strength index is showing a fresh uptick, and it stays above equilibrium levels. And the oscillator has tuned to bullish crossover, which suggests that the downside momentum has stopped. The price has supported between $60.00-$59.00 levels in recent sessions, and a break below may pave the way for lower prices to $57.

On the upside, the near-trend is supportive with the above given positive signs, but the price needs to take out the 1st resistance located at $65.30 above here $66.30 exists.

The daily indicators point the price higher in the immediate term, but the market must take our essential resistance zone spread between $66.30-66.70 to set the scene for a clear bounce back.

In the first quarter, oil price rallies nearly 26%, compared to 60% downfall in the same quarter last year. From here, what will the direction?

Traders are looking at 15 OPEC+ meetings due on 01 April 2021. In case if OPEC+ starts to ease the output cuts, how many barrels per day matters. So far, the alliance managed to keep 7.1 million bp/d output off from the market, plus Kingdom is adding its extra 1 million barrels per day. In case of production cut extending through second quarter 2021, the price would pop through the roof and aim towards $75 and $80.

  • The source denied a report that the Kingdom (Saudi Arabia) was prepared to support extending the bloc’s output cuts through June while maintaining its own voluntary 1 million b/d cut, saying it “had no basis.” He added that OPEC+ consultations had yet to begin, making it premature to assume an outcome, S&P Platts reported.
  • According to the latest market positioning data, speculators liquidated crude oil long positions sharply over the last week as a flare-up in Covid cases across Europe and fear of lockdowns put money managers on the defensive, ING reported Monday.
  • Warren Patterson and Wenyu Yao at ING said, “The exchange data shows that money managers reduced their net long positions by 51,473 lots in ICE Brent contracts over the last week, holding a net long position of 282,930 lots as of 23

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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