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Brent crude oil prices in the US West and Middle Texas region closed higher last week and are expected to do more upside this week. Both contracts reached new heights in five months. In addition, the markets have seen an increase in hedge fund and commodity fund purchases, now that they have moved to the high side of the 200-day moving average.
Last week, WTI crude oil futures were $ 63.08, up $ 2.94 or + 4.89%, and June's Brent oil futures contract $ 70.34, up $ 2.76 or + 3.92%.
The upward trend continued last week, as prices were mainly supported by very successful OPEC production cuts, which helped reduce the glut of global supply while stabilizing prices. the prices. US sanctions against Iran and Venezuela provide additional support.
The announcement of sanctions against Iran intensified last week when the United States announced that it was reducing the number of exemptions, while increasing the economic pressure on the rogue country.
US economic news was mixed last week, but the stronger-than-expected US PMI manufacturing sector report may have been enough to dispel concerns over slowing economic growth in the US, which is putting pressure on the US economy. request. Friday's mixed job report also helped reduce worries, leading to higher prices.
Bullish traders have also received a gift in the form of escalating conflict in Libya that could tighten crude oil reserves. According to reported information, Libyan commander Khalifa Haftar ordered his troops to march on the capital Tripoli, thus aggravating the conflict with the internationally recognized government.
Other news
US energy companies increased the number of their oil rigs in operation last week for the first time in seven weeks. The companies added 15 oil platforms to April 5, the largest increase since May 2018, bringing the total to 831, announced Friday the energy services firm Baker Hughes of General Electric in its most followed report.
China was also in the news last week. First, better-than-expected manufacturing PMI data helped to ease concerns about declining demand. Second, the optimism that the United States and China were about to end their trade dispute also helped to support prices.
Weekly forecasts
Prices could go up early next week as a result of a Platts report, released this weekend. According to the report, "OPEC sharply tightened the oil market in March, dropping by 570,000 b / d its February output level, while Saudi Arabia continued to apply cuts of production and that Venezuela was suffering from major power cuts adding to US sanctions ".
"The bloc of 14 countries pumped 30.23 million b / d during the month, the lowest level in more than four years, with Venezuela hit by the crisis contributing the most to the decline."
Technical factors could play a role in price action this week, with WTI hitting a key level of $ 63.45 and Brent close to $ 71.77. Both markets seem well supported by the graphics. The WTI is moving away from its main support at $ 59.63 and the Brent from its main support at $ 67.90.
Fundamentally, the market will continue to be underpinned by OPEC supply cuts and US sanctions against Iran and Venezuela. The wildcard will be the military conflict in Libya. If a new escalation causes a stockout, wait for the prices to skyrocket.
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