The market is in the media spotlight with price projections continuing to rise. Shortages, inflation and economic growth have all been major factors in the upward trend in oil throughout this year. And with gas at a 7-year high, pressure has grown on the Biden administration to dampen the steadily rising prices.
However, this leads to the current disagreement between the United States and OPEC (Organization of the Petroleum Exporting Countries).
As the United States and other countries considered releasing personal oil reserves to calm prices, OPEC responded by warning that if the United States, India, China and South Korea were all releasing oil, they would not increase their oil production. They believe the oil market will tip into a surplus, warning against the rush to release too much oil.
On the inflation side, JP Morgan created a study of oil prices versus inflation-adjusted stocks, showing that 20 years ago, if oil had kept pace with the percentage increase in equities (excluding the NASDAQ index), the price of oil would be close to $ 115 per barrel. .
Currently, the price is $ 78 per barrel. From this point of view, oil is still much cheaper compared to $ 115. However, with so many moving parts and potential manipulation on OPEC’s part, it is difficult to determine where the price should be based on increasing demand.
By moving away from fundamentals, charting can add more perspective to the near term future of oil. Above is a chart of the United States Oil Fund (NYSE 🙂 ETF. Currently, USO has completed a second close on its 50 day moving average (DMA) confirming a bullish phase.
Although it is in a recent downtrend, if the USO can maintain its 50-DMA at $ 55.18, or its 10-DMA at $ 55.53, we could see it return to highs near 59. $.
On the flip side, if the USO goes down, watch the $ 53.50 to $ 54.50 support area to hold on. Either way, consumers are looking for cheaper prices which OPEC is reluctant to achieve by increasing supply.
Therefore, it will be interesting to monitor developments in the oil market if demand continues to exceed supply, putting pressure not only on travel and the flow of goods, but also on the current US administration.
- () 464.45 new support to hold.
- () 228.26 supports 50-DMA.
- () Watch 355.34 to hold on.
- () I am watching to stay above 10-DMA at 397.62.
- (Regional banks) 75.75 resistance zone.
- (Semiconductors) Like that to stay over 300.
- (Transport) 270.89 supported.
- (Biotechnology) 150.21 new support.
- (Retail) Sitting in support of the previous trading range.
- Unwanted bonds () Monitor the inversion pattern.
- () 21.78 50-DMA.
- USO (American Petroleum Fund) Support from 53.50 to 54.50.
- (iShares 20+ years Treasury) 144.60 assistance zone.
- (Agriculture) 20.00 10-DMA minor support