30 June, AtoZForex – Oil prices are back on the radar after Goldman Sachs recently gave a bearish outlook on the commodity prices, as we consider the post Brexit oil price outlook. Early in the Asian trading session, the black gold retraced, following the post-Brexit rally seen in recent days.
WTI struggles to break $50
WTI has been struggling to break the $50 per barrel region, testing the zone several times and failing to breakout in recent weeks. The prices remain on the brink, following Goldman Sachs bearish forecasts, citing that risks remain to the downside for oil. Also supporting the downside, is the stronger US dollar across the board, in addition to fading concerns over Norwegian strike outages.
Post Brexit oil price outlook
On the top side however, US crude oil stockpiles fell further, as shown in the latest report from the Energy Information Administration (EIA). The report showed a decreased stockpile of 4.1m barrels. Marking the sixth-straight week of declines. However, in the real sense, the fall can be seen as a seasonal adjustment. Oil inventories usually shrink as the summer driving season starts to kick into full gear. Refiners that are sidelined for maintenance during the winter and early spring months ramp up again in anticipation of stronger gasoline demand.
Earlier in the month, Morgan Stanley forecast that oil supply is likely to again increase, therefore bringing back the glut situation. The bank said:
“Oversupply is likely to return as outages resolve, and prices could fall back into a $30-50 oversupply pricing regime,” the team wrote. Returning Canada production alone should be enough to put the market back into oversupply, even if Nigeria remains near current levels,” they wrote
With credible fundamental arguments for both an increase and a fall in crude oil prices, we therefore turn to technical analysis for a near term view on potential price direction. Looking at the WTI daily chart, we see price rising in the past few days as price approaching last week’s high around 50.63. Considering the current bullish momentum, price is expected to rally towards last week’s high. A break of the 50.63 zone will likely take us all the way up to around $52 per barrel in coming days.
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