Crude oil price extended gains from the previous session amid supply disruptions in the short term. A weaker US dollar has also been offering support to the asset. Even so, it will likely remain range-bound as recession concerns and China’s slow economic recovery continue to weigh on the market.
Crude oil price rallied on prospects of tighter supplies in the short term amid political unrest in different European regions. This includes the transport strikes in France and Germany. Besides, there were reports that about 450,000 bpd of oil supplies from Kurdistan were halted. This follows a confirmation that Turkey’s shipment required consent from Iraq.
The weakening of the US dollar also boosted crude oil price. Seeing that the asset is priced in dollars, a decline in the currency’s value makes it less expensive for buyers holding other currencies.
Later on Tuesday, crude oil price will be reacting to US weekly inventories data. In recent weeks, the steady stockpiles build have added to the oil demand concerns; an aspect that has weighed on both the WTI and Brent futures. In the prior week’s release, API recorded a build of 3.262 million barrels. The figure surpassed economists’ expectation of a draw of 1.448 million barrels.
Besides, investors will be eyeing Chinese business activity figures on Friday for cues on the health of the nation’s economy. Optimism regarding the country’s economic recovery has been one of the major bullish drivers in the recent past. However, the rebound has been rather slow. This explains why despite the support from this optimism, crude oil price remains subject to curbed gains.
Brent crude oil price forecast
Crude oil price recorded rather subtle movements on Tuesday after the gains reported in the previous session. Despite the rebounding observed in recent sessions, the benchmark for global oil has been trading below the previously steady support zone of 80.00 for about two weeks now.
As at the time of writing, Brent crude oil price was up by 0.04% at 77.75. A look at its daily chart shows that it continues to trade below the 25 and 50-day exponential moving averages. While I expect the asset to have found its short term bottom at 70.00, I forecast that it will remain subject to curbed gains in the ensuing sessions.
In particular, the range between 75.27 and 79.85 will be worth watching. Further rebounding may curb the gains at 82.14. On the lower side, I expect crude oil price to find support at 73.90 in the event of a pullback past the aforementioned range.