Oil slips, but Brent stays near $70(With Trading Strategy)

Brent crude prices eased on Friday but hovered near $70 a barrel as production cuts by major oil producers constrained supply, with optimism about a recovery in demand for the resource in the second half of the year also lending support.

U.S. West Texas Intermediate crude fell 0.55% to $65.498 per barrel, and Brent crude oil fell 0.56% to $68.802 per barrel by 15:50(GMT+8) on Friday.

The sentiment was also buoyed by the decision of the Organization of Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, earlier this month to largely hold production cuts in April.

Investors have been pumping funds into commodities such as oil on expectations of a demand recovery in the second half of the year as the global economy grows, while a wider rollout of vaccines against the COVID-19 pandemic allows more people to travel this summer.

“Assuming vaccination programmes are successful, we expect pent-up demand for gasoline to be released this summer during the U.S. and European driving season,” FGE analysts said in a note.

RBC Capital analysts said the fundamentals for summer gasoline is the most bullish in nearly a decade.

“We think this will support the entire oil complex this summer and beyond.”

OPEC said on Thursday a recovery in oil demand will be focused on the second half of the year as the impact of the pandemic lingers as a headwind for the group and its allies in supporting the market.

In a monthly report, the Organization of the Petroleum Exporting Countries said demand will rise by 5.89 million barrels per day (bpd) in 2021, or 6.5%, up slightly from last month. But the group cut its forecasts for the first half.

“Total oil demand is foreseen to reach 96.3 million bpd with most consumption appearing in the second half,” OPEC said in the report.

“This year’s demand growth will not be able to compensate for the major shortfall from 2020 as mobility is forecast to remain impaired throughout 2021.”

OPEC raised its forecast of world economic growth this year to 5.1% from 4.8% as activity accelerates by the end of the first half. Still, it sees the mobility restrictions continuing to dampen oil demand, despite faster growth.

“Oil-intensive sectors, especially travel and transportation, will remain disproportionately affected, with a larger negative impact on 2020 oil demand and a lower positive contribution to 2021 oil demand, relative to global economic growth,” OPEC said.

Trading Strategy (source: Trading Central)

Pivot: 65.10

Our preference: long positions above 65.10 with targets at 66.20 & 66.90 in extension.

Alternative scenario: below 65.10 look for further downside with 64.60 & 64.00 as targets.

Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Supports and resistances:

68.00

66.90

66.20

65.60 Last

65.10

64.60

64.00

Pivot: 68.60

Our preference: long positions above 68.60 with targets at 69.85 & 70.35 in extension.

Alternative scenario: below 68.60 look for further downside with 68.00 & 67.40 as targets.

Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Supports and resistances:

70.90

70.35

69.85

69.20 Last

68.60

68.00

67.40

Guideline for Trading Central strategy 

Trend chart reading guideline

1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days

2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.

3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;

4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.

How to use TC strategy？

1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 

2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.

3. [Alternative scenario] is the plan B for your reference. 

4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 

5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.