Daily Market Recap – USOIL Prices back on strong resistance

Oil prices are rising after a drop in U.S. crude inventories bolstered OPEC's robust demand outlook, while the market awaited new information on the Colonial Pipeline failure.

Gas stations from Florida to Virginia began to run out of fuel on Tuesday as motorists rushed to fill up and prices at the pump soared. U.S. unleaded gasoline prices averaged $2.99 per gallon, the highest level since November 2014, the American Automobile Association said.

Colonial Pipeline said it hopes to restart much of the system by the end of the week.

Meanwhile, oil prices were supported by the latest outlook from the Organization of the Petroleum Exporting Countries (OPEC), which maintained its forecast for a strong recovery in global oil demand in 2021, with growth in China and the U.S. outweighing the impact of the coronavirus crisis in India.

OPEC said it expects demand to rise by 5.95 million barrels per day this year, unchanged from its forecast last month. However, it cut its demand outlook for the second quarter by 300,000 barrels per day due to the spike in COVID-19 infections in India.

Data from the industry group American Petroleum Institute showed that U.S. crude oil inventories fell by 2.5 million barrels in the week to May 7, according to two market sources, slightly less than expected.

The decline came before the Colonial Pipeline suffered a cyberattack on Friday that forced the pipeline, which carries more than 2.5 million barrels of fuel a day, to shut down.

Oil prices are back in a strong resistance zone between 66.82 USD and 68 USD. The last attempt to break through this zone caused a Doji-shaped reversal pattern with the RSI in the overbought zone. Prices subsequently returned to support the 13-period ascending moving average.

The preservation of this dynamic support and the RSI which returned to less tense levels can suggest a bullish continuation and the overcoming of the high of the last 3 years. Prices could then join the October 2018 highs at 76.81 USD.

(Chart Source: Tradingview 12.05.2021)

The trend remains bullish above the support line at 57.26 USD and the 34-period rising moving average.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.