Oil prices completed Q2 with a strong recovery performance following the beating initially encountered late in April. Since the brief dip into negative territory oil bulls have been on a solid mission, pushing the price in the right direction, towards pre-bear market levels, although some way off still.
WTI crude more or less has been moving to the north for some ten weeks, producing an advance of some 287% within the noted period. The recovery is largely thanks to OPEC and allies, in producing oil output when there was much too much supply where demand was not being met.
As a reminder; Opec and allies agreed to extend oil production cuts to the end of July, Opec+ had agreed in April that it would cut supply by 9.7m barrels per day (bpd) during May-June to prop up prices that had collapsed due to the coronavirus crisis.
It is worth noting that OPEC’s oil production in June came in at the lowest level since May 1991 during the Gulf War, and collectively met its promised cut.
Demand has been increasing as thanks to economies reopening, with the requirement for fuel and oil coming back into play. As long as there are no major disruptions from a potential second wave of Covid-19, then oil should continue to be supported.
There is a major barrier of supply running from the region of $42 up to $45, a strong prior action area of demand, before the big crash from Jan-April. If the bulls are able to breakdown the noted area, there would be room for a fast recovery to pre-bear market levels.
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