Oil surged amid soft dollar
What happened?
Oil is edging higher due to the overall risk-on sentiment and a weaker US dollar, despite rising cases in India. India is one of the main oil importers, and it continues to report more than 300 000 infections every day. This year, oil has been boosted by the vaccine rollout, but some local coronavirus outbreaks and concerns over inflation limited its gains.
Besides, OPEC on Tuesday gave a strong outlook on the global recovery in oil demand in 2021 due to the growth in China and the United States, which OPEC believes outweighs the coronavirus crisis in India. As a result, the OPEC members have decided to gradually ease oil production cuts.
Technical analysis
Let’s discuss oil on the example of UK Brent oil (XBR/USD). The asset has been moving inside the ascending channel since late March. Pay attention to how the price has reversed up from the lower trend line: over and over again. Thus, this level acts as strong support for oil, and as we expected it has bounced off it today again. The way up to $70.00 a barrel is clear now. It’s a psychological mark, which oil is likely to struggle to cross on the first try. However, sooner or later it may cross it as well and rally up further and even beat this year’s high of $71.00. In the opposite scenario, the move below the 50-day moving average of $65.60 will press oil down to a late April low of $64.00.
