Oil continues to rise as vaccine news boost optimism for demand recovery
WTI oil rises again above $40 barrier on Tuesday, following Monday’s 6.6% rally (the biggest one-day advance since May 5) when bulls spiked to $41.32 (the highest since Oct 21) but failed to close above psychological $40 level (also daily cloud top).
Oil prices skyrocketed on Monday after Covid-19 vaccine news strongly boosted hopes for demand recovery, additionally obstructed by fresh lockdowns across the Europe.
Additional support comes from signals that OPEC+ group could hold back supply increase, scheduled to start as from January 2021 and instead could adjust their production cut if demand weakens before the vaccine is available.
Monday’s massive bullish daily candle which also completed bullish engulfing pattern, underpins near-term action, supported by rising bullish momentum and moving averages in bullish setup on daily chart.
Two-legged recovery rally from $33.61 (2 Nov low) has so far retraced over 76.4% of $41.86/$33.61 fall and eyes target at $41.86 (20 Oct high), break of which would reinforce bullish stance and open way towards key barrier at $43.75 (top of post-pandemic recovery rally, posted on 26 Aug).
Markets await release of oil inventories reports from American Petroleum Institute (today) and Energy Information Administration (on Wednesday) for fresh signals.
Res: 41.32; 41.86; 42.29; 43.17
Sup: 40.56; 40.00; 39.65; 39.14