Stronger Oil price lifting Energy Stocks!
Stock markets are trading near their record highs, especially in Europe, as investors are pricing more on faster economic recovery after yesterday`s impressive PMI data. And more substantial Oil prices lifting Energy Stocks.
Even if it is not as good as yesterday, stocks are still trading positively while investors are waiting for Friday`s job data.
Yesterday, OPEC+ unanimously decided to keep the original production increase plan unchanged, increasing production respectively by 350K barrels and 441K barrels per day in June and July. At the same time, Saudi Arabia also stated that it would continue to lift its 1 million barrels per day voluntary production reduction plan. In any case, the news of the organization`s announcement of an increase in production did not hurt the oil market. U.S. crude oil touched $68.69, the highest level of 2021, and as of the close, reported $67.68/barrel; Brent oil also recorded a daily increase of nearly 3% to the highest point 71.30 US dollars, for the first time since March 8 to touch the 71 U.S. dollars level.
The most critical factor for the rise in oil prices is that most Surveys expressed optimism about the prospects of economic recovery. And mainly after significant progress in vaccination and the gradual opening of the economy. New York City expected to lift all restrictions on commercial activities on July 1. Also, many European countries have further relaxed limits. Reopenings will increase population mobility and will boost the demand. It is expected that global Oil demand will exceed 99 million barrels per day in the fourth quarter, and oil inventories will fall back to the average level from 2015 to 2019. In short, OPEC+ emphasizes that the growth rate of demand will exceed the rate of increase of production by member countries, so there is still room for oil prices to rise.
On the other hand, the sanctions on Iran that may be lifted and the mutated virus strain are still a hidden risk of rising oil prices. If the United States lifts sanctions on Iran, Iran, which used to be one of the largest oil-producing countries, will officially bring a large amount of crude oil into the market, putting pressure on the oil market bulls. In addition, Iran hopes to reach an agreement with the United States before the country`s June 18 presidential election. After all, if radical conservatives win the final victory in this election, the probability of the nuclear agreement being passed may be significantly reduced.
The surge in virus infections in Asia, which will partially curb demand, while there are signs that the U.K. may have entered the early stages of the third wave of pandemics, can ease the Oil bull`s speed.
So far, the broad Euro STOXX gained 0.22% in the stock markets today, slightly below Tuesday`s record high. GB100 extended its rally with 0.20%, same as German DAX, while French CAC 40 gained 0.15% at the time of writing.
However, in the Asian market, the situation was a bit different. While Nikkei 225 closed 0.46% higher, Hang Seng and Shanghai respectively losing 0.58% and 0.76%.
Oil technical review
Oil technically trading in a clear uptrend, as you can see in the bellow daily chart. Currently, 100 DMA at $61.00 is the key support, and any number above this level is still supporting the market`s bulls. Before the 100DMA, 66.00 and 63.80, where the lasted direction changed and pointed by Parabolic SAR and the higher and lower level of the latest range are the first and second support. 68.63 and 69.60 are the following resistance levels and can be reached as long as it is trading above the pivot point at $67.65.
