The West Texas Intermediate crude oil market rallied during Thursday’s trading session, bouncing higher from the 200-day exponential moving average. However, there is significant resistance, which suggests the possibility of some correction from here. To the upside, analysts see significant resistance at the $43.50 level as well as key support at the $36.25 level. Right now, the 50 and 200 days EMAs are almost flat.
Obviously, the Brent markets look the same for the most part and are also testing the 200 day EMA. Analysts also think that sooner or later they will fall. At the moment, it seems that investors are killing time, trying to figure out what to do next.
Covid-19 pandemic is still hurting oil demand
There’s hope that an effective coronavirus vaccine could be approved before the end of the year. However, there is also a very high surplus of oil. Many economies are closing again to prevent the spread of the pandemic.
Potential for Covid-19 vaccine developed by Pfizer and BioNTech bushed Brent futures above $45 a barrel earlier this week. It’s been their highest level in two months. Brent traded around $44 a barrel on Thursday, and WTI was selling at $41.50 a barrel.
The International Energy Agency is slashing its forecast for demand, saying that the resurgence of the coronavirus in Europe and the US is weighing on fuel consumption again. According to the Paris-based group, vaccines are unlikely to boost demand until well into next year significantly. That will leave global consumption still below levels seen before the pandemic.
Under these circumstances, analysts believe that the market will end up falling at some point. They will surely reach the bottom of the range of motion.
The alternative is a bullish break above $46.50. It could force investors to rethink the situation.