Oil prices saw three weeks of rises in a row following the unexpected lowering of production by OPEC+, a decline in US inventories and increased spending by Chinese consumers.
Prices rebounded from a low of $64.2 a barrel on March 20 (support level) to April’s high of $81.68 (resistance level).
“Prices rallied the most this year on Monday, surging 6.3 per cent, following the decision of [OPEC+] to slash more than one million barrels of daily output starting in May.
“Crude has risen 26 per cent from its intraday low reached mid-March, when banking turmoil prompted a flight from risk assets.
“Prices were already recovering amid growing Chinese fuel demand and a weakening US dollar when OPEC+ intervened, confounding short sellers and amplifying the rebound,” Bloomberg reported.
CNBC cited a report by global research and consultancy group Wood Mackenzie that said “China will make up a sizeable portion of the world’s demand recovery for oil as the global economy braces itself for a slowdown in the wake of interest rate hikes”.
“The research firm said in a Thursday report that it views China’s reopening as the ‘single biggest demand driver’ for a recovery in oil demand this year – it expects the country will make up roughly 40 per cent of the world’s recovery in demand for the commodity.
“‘A return to normal mobility in China is the single biggest demand driver, accounting for 1.0 million barrels per day of the 2.6 million increase this year,’ a team of analysts … said in the report, laying out its base case scenario.
“That means 38.5 per cent of global oil demand recovery would come from China,” CNBC reported.
The Wall Street Journal said: “A gauge of activity in China’s services sector reached its highest level in more than a decade in March, a sign that Chinese consumers are heading back to stores and restaurants, powering an economic recovery following the end of almost three years of strict Covid-19 controls.”
Oil opened this Monday with steady movement and traded at around $80 a barrel, near a weekly high of $81.
For this week’s trade recommendation, following the bullish momentum, oil investors could wait to place a buy order at $79 a barrel, taking profit at $83 and setting the stop-loss at $77.50.