Brent crude oil continued to climb last week and month as well. But the magnitude has cooled significantly. The black gold closed with marginal gains in July of 0.70% vs. 7.00% in June.
Overall in July, oil gained the fourth month for the third time in a row since 2020 lows.
Interestingly, energy space outperformed the other asset classes at all times- please see the below chart. Besides pound falls in the same category against the dollar.
Forwarding to August, historically, 13 times oil closed higher in August and only nine times the price closed lower.
We can see oil price traversing and sustain above the critical resistance of the 200-monthly simple moving average on the higher time frame.
With closing at $75 (rounded), the nearest resistance is $76.20 and $77.50. The daily RSI and oscillator are positive, whereas weekly indicators suggesting another side of the coin.
On the lower side, the support layers of oil are placed between $71 and $67. Below here, $64.50 and $60 exists.
The recent rally has been inflated by solid oil demand led by vaccination roll out programs across the globe. The Brent oil closed 2.50% last week and 1.90% in July.
Analysts pointed to a rapid rebound in India’s gasoline consumption and industrial production following its COVID-19 surge as a sign that economies are more resilient, Reuters reported.
The ongoing Tokyo Olympics could also support a strong oil demand story. Paul Donovan at UBS said, If the Games are a success, the publicity can encourage tourism in the following years. Alternatively, a poorly organized Games can deter both tourists and investors and lead to longer-term economic damage.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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