Oil could accelerate its recovery

05 May 2023 268
Oil could accelerate its recovery

Oil is actively recovering after a 2-day decline of 10%. All the accumulated negativity was factored in commodity prices. Russia’s OPEC+ representative Alexander Novak considers the current correction short-lived. Therefore, the alliance is not taking any action to stimulate a rise in oil prices.

A severe energy deficit is projected in some regions like India due to strong economic growth and changing weather patterns. Texas is also one of these regions.

This summer Texas officials expect to use wind and solar plants to meet citizens’ peak energy demand.

According to the Electric Reliability Council of Texas (ERCOT), during normal summer weather energy consumption will reach 82.7 gigawatts and exceed the record level of 80 gigawatts last July. One gigawatt is enough to power about 200,000 homes. 

The state’s energy consumption is rising due to the influx of labor and interest in digital currencies.

Most of Texas will have above-average temperatures from May to July in accordance with the U.S. Climate Prediction Center data.

The U.S. strategic oil reserve continues to shrink. At the same time, oil prices have once again reached the level where the Biden administration planned to start replenishing reserves.

U.S. oil reserves declined for the third time in a row last week. Commodity inventories decreased by almost 1.3 million barrels. The U.S. Energy Information Administration (EIA) data were released on Wednesday. Contrary to expectations, gasoline stockpiles increased by 1.743 million barrels. Automotive fuel gasoline is the most consumed fuel product in the U.S. Distillate inventories declined slightly more than forecast, by 1.191 million barrels.

According to the technical analysis, the oil price attempts to break through the upper limit of the consolidation on the hour timeframe. This attempt is likely to be successful, as the news backdrop is improving.

The growth target will be the next resistance level near $75.30. A Stop-loss will be set at the exit down from the current rectangular of $71.45. This price will mean the local low update.

Brent crude oil prices are likely to rise:

Take profit – 75.30

Stop-loss – 71.45

This content is for informational purposes only and is not intended to be investing advice.

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