Throughout May, UK Oil slowly but surely moved higher to that three month high, before falling sharply, and then making repeated attempts to push passed the current resistance around $43. Should this level be convincingly broken, it will most likely provide some support.
Its recent surge higher is a vastly different picture to mid-April, as UK Oil sank to its lowest level in many years below $20, and currently UK Oil is close to closing the significant gap down in early March, by returning to above $45. In early May, UK Oil settled right around the key $30 level after rallying well off the multi-year lows below $16, and it also consolidated well several weeks ago around $35. After a significant gap down from $45 to $35 in early March, it initially received solid support from another key level of $25 which had supported it well for several weeks, which was so desperately needed, so it was telling when its largest fall was breaking through the $25 level mid-April.
Through most of March and April, UK Oil did well to consolidate above $25 after such significant falls in early March. During the first half of March, UK Oil fell from a previous key level at $58 down to the multi-year lows and consolidated well stopping the rot, before the break lower in the second half of April. Of note is that any of these levels are now likely to provide resistance if and when UK Oil rallies up from its lows, although with current price action considered, this would have to be some time off yet. The $58 level has played a significant role on several occasions therefore is likely to now offer some resistance should UK Oil attempt to rally further, although this is now some distance away.
Oil prices have received support from some positive economic data showing the industrial sector is picking up post intimal COVID-19 lockdowns, however the lid is being kept as coronavirus cases continue to grow globally, now passing 18 million cases. In an encouraging sign, the positive economic data has also come from different parts of the world, namely the United States, Asia and Europe. Manufacturing activity across the euro zone expanded last month for the first time since early 2019, with similar data from Asia, while the Institute for Supply Management said the United States enjoyed increased manufacturing activity in July to its highest level in nearly 18 months. Keen observers of oil markets however believe that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, need to find a balance between supporting oil prices and keeping U.S. crude production at bay, as OPEC+ starts to roll back supply cuts. The significant reduction in commercial aviation remains and any increase in demand for oil will be very gradual.
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.