UK Oil Broke Out of Long Month Consolidation
- The Oil markets reached a new All Time High (ATH) early march on the back of the recovery story with the rollout of vaccines worldwide. Traders were also confident that OPEC would maintain production (not increase further) until the market stabilizes.
- In a turn of events the OPEC made compromises for slight increases in production. Coupled with stories of new strains of Covid-19 continuing to plague the world (with India having record high cases >200k a day), the demand story seems weaker in the short term. Furthermore, as China works to strengthen partnership with Iran, this will displace demand for oil from UK or US.
- Most recently the market went into price discovery mode given the various bull and bear factors, forming a range generally between $60.50-65.50 levels. The range contracted end March early April and most recently broke up into a new zone in the $66-67.50 range before finding some resistance.
- Traders may consider a breakout trade to test the previous high at $71.88 should there be follow through but keeping in mind the bearish fundamental factors discussed above which may trigger selling at higher levels.
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