The price of crude oil last week fell from $68.979 to $61.850 per barrel.
On Monday this week, the price rebounded three per cent “as investor risk appetite increased and the US dollar softened”, Oilprice.com’s Tsvetana Paraskova reported.
Despite the bounce early this week, investors should in the longer term consider a selling position as the previous pressures remain. Crude is still finding it difficult to draw support and buyers as global demand has fallen with restrictions and lockdowns due to concerns over the Covid-19 Delta variant.
Fxempire.com on August 22 cited Reuters as reporting that “China, the world’s largest crude importer, has imposed new restrictions with its ‘zero tolerance’ coronavirus policy, which is affecting shipping and global supply chains. The US and China have also imposed restrictions on flight capacity”.
This brake on fuel demand and other factors should be considered for investors remaining in a selling mood.
“US President Joe Biden’s administration [has] urged OPEC and its allies [OPEC+] to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
“The request reflects the White House’s willingness to engage major world oil producers for more supply to help industry and consumers, even as it seeks the mantle of global leadership in the fight against climate change and discourages drilling at home,” Reuters reported on August 12.
As a result, “oil prices came off their peak in July, after OPEC+ announced that it would be gradually increasing supply to reverse its previous 5.8 million barrel-per-day production cuts by September 2022”, ZUU online reported on August 20.
“This latest development could not have come at a worse time for the crude oil market, as the increased supply is expected to dampen prices,” it added.
For this week’s trading recommendation, investors should look at selling crude oil at $66.168 per barrel, with the take-profit function setting at $57.777 and stop-loss at $69.444 per barrel.