The oil price rose after the EIA report showed a sharp decline in crude oil inventories.

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Global demand for oil will return to pre-pandemic levels in 2022
COVID 19 cases in the US continue to rise, while Europe is not doing any better with this pandemic
Turkey has increased the estimated reserves in a gas field off its Black Sea coast to 405 billion cubic meters

Crude oil prices rose above $41.5 this trading week and the current price is around $40.9. Oil prices stabilized above $40 after the EIA report showed a sharp drop in crude oil inventories due to the closure of offshore production.

Fundamental analysis: There is still no clear trend for oil prices

Crude oil is still above the psychological level of 40 dollars, although OPEC has announced that global oil demand in 2022 will return to pre-pandemic levels. Hurricane Delta shut down most production in the Gulf of Mexico, and the EIA report showed a sharp drop in crude oil inventories.

The EIA predicts that global oil demand will be 93.1 million b/d in 2020, a decline of 8.3 million b/d from 2019. It predicts that demand will increase by 6.5 million b/d in 2021 and the price will also rise.

According to the news, Turkey has increased the estimated reserves in a gas field off its Black Sea coast to 405 billion cubic meters after finding an additional 85 billion cubic meters. The price of crude oil weakened to 39.66 dollars on Thursday as fears grow that new restrictive measures could significantly reduce demand for oil.

The coronavirus crisis has already reduced global demand for oil, and OPEC has decided to limit production until December. Demand for oil has also weakened as air traffic remains restricted, and some reports indicate that worldwide flights were 26% lower than last year.

COVID-19 cases in the U.S. continue to increase, while Europe is not doing any better with this pandemic. This is certainly not good for the economy and crude oil prices will be linked to the global economic outlook.

There is still no clear trend for oil prices, but analysts remain bullish on oil and most of them expect oil prices to rise (a slow but steady increase) in the coming months.

Technical analysis: Crude oil price has stabilized above USD 40
Data source: tradingview.com

On this diagram I have marked important resistance and support levels. The important support levels are $40 and $35, $45 and $50 represent the resistance levels.

If the price jumps above $45 it would be a signal to buy oil and we have the open path to $50. A rise above $50 supports the continuation of the uptrend and the next price target could be around $55.

If the price on the other side falls below $40, it would be a “sell” signal and we have the open path to $35.

Summary

The price of crude oil rose this trading week after the EIA report showed a sharp drop in crude oil inventories. There is still no clear trend for oil prices, but analysts remain “bullish” for oil and most of them expect oil prices to rise in the coming months. In the medium term, crude oil prices will be linked to the global economic recovery and concerns about oil demand.

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