Crude prices were supported in the recent days by many factors, including the improving pandemic situation and the reopening of worldwide economies, and positive developments in the research of the vaccine against COVID-19.
Positive results of the vaccine tests released by Pfizer and German BioNTech are encouraging investors as the demand for crude may increase further.
U.S. crude reserves recorded a sharp decline of 7.2 million barrels for the previous week. It is worth mentioning that last week crude reserves were up by 1.4 million barrels. Such dynamic data may hint to a greater need for crude and rapid draining of reserves which may also support crude prices. Besides, the U.S. Dollar has been on the decline track over recent days. The U.S. Dollar index that showed the strength of the Greenback against six major currencies dropped below 97 points from 97.8 points. The weakening of the Dollar affects crude prices directly as they are denominated in U.S. Dollars. All these factors may facilitate Brent crude prices to move at least within the area of $42.3-42.6 per barrel.
The upcoming U.S. Non-Farm payroll report on Thursday may affect the oil market significantly as it directly affects investors’ appetite for risk and the Greenback itself.
The most likely area for Brent crude prices by the end of this week may be settled between $42.1-$43.2 per barrel. If markets sustain positive developments, the price may test the strong resistance level of $44 per barrel. And, if this level is broken by another upward move towards $45.3 in order to close the gap from March 6, when crude prices plummeted after the breaking off of the OPEC+ deal, may be possible.
As an alternative scenario, the correction to the $40 per barrel support level may be considered.
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
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