The prices were driven by the ongoing production cuts from OPEC+, the extra million barrel per day reduction in Saudi Arabia’s output.  Another reason is a strong Asian demand from China which has been the most bullish factor for oil prices since the pandemic hit. China’s January crude oil imports average 11.12 million barrel per day which is 18% more than December average.

Last week, Torbjörn Törnqvist, chief executive at one of the world’s largest independent oil traders, Gunvor told Bloomberg that oil prices were unlikely to soar much above the $60 per barrel mark, considering that this price level would incentivize a lot of oil supply, including from the United States.

In term of fundamentals, we notice that the prices of oil have gotten ahead of itself because right now demand is still relatively weak. As we can see that China is a strong driver of demand, while Europe is the worst-hit market. The U.S. is more stable than Europe with just “a couple million barrels loss in demand,” according to Törnqvist.

For technical analysis, we notice that there is a strong major uptrend of oil price in daily chart but there is signal of overbought from technical indicators Relative Strength Index (RSI). The price at $60.90 a barrel is the day high and could be the resistance of today and forecasting to see the consolidation of oil price today. Technical trading recommendation, trader should wait to buy oil price at the support at $59.70 a barrel and put take profit at $60.80 a barrel and need to put stop loss function at $58.80 a barrel to minimize the risk.

Analyzed by : Mr. ChhayHeng Chhea,Independent Analyst