During the last trading day of this week, which is the 25th of 2020 the oil price rose on the commodity market. According to economic correspondents and financial strategists, the current business trend of the bull market is the result of renewed investor confidence in reducing crude oil production while maintaining demand for oil, as close as before the global coronavirus crisis hit. Based on these facts, the price of West Texas Intermediate (WTI) oil rose by about 2 percent during Thursday, 18 June 2020.
On Friday 19 June 2020, at 6:59 am CET, WTI light crude oil traded on the New York Mercantile Exchange (NYMEX) commodity market at US$ 39.19 per barrel with the current daily price increase by +0.90 percent. The WTI oil counterpart, Brent North Sea crude oil, was trading at US$ 41.83 per barrel on the Intercontinental Exchange Europe (ICE) commodity market at that time, with a daily gain of +0.77%. However, in terms of annual comparisons, with the current level of oil prices there is still around a 30 percent drop compared to previous prices.
It is these data from the technical analysis of investment banks’ financial strategists that give investors enough assurance to restore confidence in rising commodity oil prices. Returning to a partially functioning oil market under normal regime leaves ample room for global commodity oil prices rising. Currently, oil-trading volumes are too weak, indicating a lack of conviction and, in particular, the ability to create any major upward pressure on oil prices, said CMC Markets chief strategist Michael McCarthy. Furthermore, this expert pointed out that on the technical side there is strong resistance in WTI contracts prices that are between US$ 40 and 41 per barrel.
Brokerage analysts see the WTI oil price slightly above US$ 40 per barrel as a price, where more U.S. oil producers will revive their previously closed wells and increase existing oil production. According to financial strategists, this price of oil will allow – especially shale miners in the USA – to resume oil production so that the production is profitable and the return on sales reaches effective parameters. As a result, analysts predict a recurring possible drop in oil prices to around US$ 35 per barrel, which is reportedly the limit of the cost price of shale oil extraction, according to economic correspondents. According to these experts, even with a partial and short-term decline in oil prices on the commodity market investor confidence in the oil trade should no longer be significantly undermined and investor sentiment regarding oil demand should not be affected.