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“It appears that some of the excitement around the OPEC+ cuts has faded, amid light flows,” said Emily Ashford, Executive Director of Energy Research at Standard Chartered.
Technical indicators also took a toll on prices. The US benchmark failed to break through its 200-day moving average last week and has been trading lower ever since. The $7 jump in prices after OPEC+ announcement created a so-called chart gap, which then prompted a corrective move to the downside to fill the large break in prices.
In March, oil hit a 15-month low in the aftermath of bank turmoil that shook confidence across all markets.
The combination of the surprise announcement by OPEC+ on production cuts coupled with a reduction in Iraqi flows pushed oil back into the $80-range. Many market watchers are still betting on China’s demand rebound, which grew its economy at the fastest pace in a year, putting the country on track to reach its growth goal.
Hedge funds increased bullish bets on crude in the week ending April 18th, boosting long positions in WTI and Brent to five-month and six-week highs, respectively.
Prices:
- WTI for June delivery rose 50 cents to settle at $77.87 a barrel.
- Brent for June settlement gained 56 cents to settle at $81.66 a barrel.
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