Oil prices are climbing higher as the trading week commences, moving to the highest levels seen in some two months.
The push to the upside comes in line with the easing of lockdown measures, as demand starts to gradually pick back up.
As a recap, Coronavirus destroyed a great amount of fuel demand as billions of businesses stopped general transportation and people not travelling that there was just no requirement for the black gold. Due to this lagging market, at the time the WTI crude May futures contract was coming up to an expiry, which sparked panic selling. Traders were stuck with barrels and had to pay buyers to take it away, hence the negative prices, as they had nowhere to store the oil.
Heading into the June contract expiry on Tuesday, there’s a noticeable different feel to the oil market, with production cuts having been enforced globally. Data last week from the U.S. EIA, showed crude inventories fell.
However, the question for many will all of this be enough to avert another panic selling moment? The odds have certainly reduced, but in this market, anything can happen. Last week, the CFTC warned trading venues, clearinghouses and futures commission merchants that negative commodities futures prices could return given this expiry.
If the prices do plunge, dips would be highly attractive in our view, given the improving fundamental factors to support oil moving forwards.
WANT TO BECOME AN ALL-ROUND TRADER?!
Fundamentals are not easy to master, which is why we wanted to make them greatly understandable for the everyday person.
Our fundamental course, helps anyone understand them, all curriculum is very much fun, informative and packed with much energy. It will help you transition into an all-round trader, implementing fundamental and technicals to provide the edge when trading. Click here to get started today!
We cover fundamental and technical analysis every single day for our members. Click here to view our membership packages.