CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Whats driving oil prices higher

Article By: ,  Senior Market Analyst
April 19, 2021 5:25 PM

Crude oil prices building on gains following a stellar performance last week. WTI crude oil surged over 6% higher across the previous week and up an additional 0.7% at the time of writing.  

What is supporting oil prices? 

1. Macro data 

WTI soared across the previous week as a combination of factors lined up. Strong economic data from both the US and China boosted optimism surrounding the global economic recovery. China’s GDP surged to 18.3% YoY in Q1, whilst retail sales jumped 34.2% indicating that the consumer recovery is well on its way. Meanwhile, in the US retail sales jumped 9.8% MoM in March smashing expectations as the US economy reopened. 

2. US petrol demand 

In addition to macro data, the US department of transport revealed that for first time since the pandemic started, driving on US motorways is higher now than it was at the same time in 2019. As the US economy re-opens fuel demand is picking up – even before driving season begins. 

3. Inventory data 

EIA inventory data revealed that there was a bigger than expected draw in US stockpiles. Crude stockpiles dropped by 5.8 million barrels last week significantly more than the 2.8 forecast. 

4. Upwardly revised demand outlook 

Both the International Energy Agency and OPEC raised their oil outlook demand for the year. Global oil demand is now expected to grow 5.7 million b/d in 2021 to 96.7 million bpd owing to the quick vaccine rollout  and US plans for huge economic stimulus spending. China’s crude imports were up 21% YoY 

Risks remain 

However, uncertainties remain, and these are just dragging on WTI prices at the start of the week. Covid cases are rising. More people are ill with covid now than at any other point through the pandemic. Europe continues with its ongoing lockdown. Several emerging market economies are under growing strain due to a resurgence of covid. Brazil and parts of South America are seeing covid numbers surge.  

India is seeing record new daily cases of over 270,000. India is the worlds third largest importer of oil, consuming almost 10% of worldwide crude exports. Lockdown restrictions were imposed over the weekend with the capital New Delhi entering a 6 day lockdown in the country. Further lockdown restrictions could dampen global demand further. 

Where next for WTI crude oil? 

WTI broke above its descending trendline dating back to early March and also pushed over its 20 & 50 EMA on the 4 hour chart in a bullish break out. The 20 EMA also crossed over the 50 EMA in a bullish signal.  

However, the recovery stalled just shy of 6400 last week’s high at 63.83. The RSI remains in positive territory buts lacks a strong directional bias. 

63.83 remains the key resistance. A break above here could see WTI head back towards $64.85/$65.00. 

On the flip side the 20 EMA offers immediate support at 62.75. A break below here could open the door to support at 61.80 the 50 EMA. A break below the 50 EMA could negate the current uptrend and see the sellers target 60.00.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024