US crude oil prices have jumped more than 10% since the start of the week, rebounding from last week’s losses. Last week, both benchmarks took a sharp dive recording their biggest decline in nine months. However, they bounced back more than 5% on Monday, snapping their weekly loss.
Crude Oil Stance
Oil prices have been rallying for the past two days following Mexico’s plans to resume crude production after a major outage. A fire that struck an offshore oil platform in Mexico run by Pemex cut down the company’s oil production by 444,000 barrels per day. This is about a quarter of Mexico’s oil production.
The bullish demand outlook in crude oil has also pushed the oil prices higher. The increase in demand edged higher after US regulators issued their first full approval for a Covid-19 vaccine. Earlier on Monday, the US Food and Drug Administration (FDA) issued full approval for Pfizer’s BioNTech two-dose vaccine.
Analysts have also linked the rise in oil prices to China’s successful fight to curb the spread of the coronavirus. Being the world’s second-largest consumer, the decline in demand from China heavily weighed on crude oil prices.
According to data published by the US Department of Energy earlier today, the weekly US Crude oil inventories fell by 2.979 million in the week ending August 20. Gasoline stockpiles fell 1million barrels in the same week. Analysts expected crude stockpiles to decline 2.7 million barrels and gasoline stocks by 1.6 million.
Crude Oil Technical Analysis
At the time of writing, US West Texas Intermediate crude oil was up 0.60% at $68.0 per barrel, while Brent crude edged 1% higher at $72.0 per barrel.
On the four-hour chart, the US WTI crude oil is trading above the 25 and 50-day exponential moving averages. Its Relative Strength Index (RSI) has edged higher. However, at 68.66, the crude oil price is close to the overbought region, hinting at an imminent sell-off period.
Therefore, despite the bullish sentiment, the oil price is likely to break out lower. If this happens, the support at $65.52 seems like a suitable target for the bears. On the flip side, a bullish breakout will have the bulls eyeing the $70 level.