Crude Oil prices continued to rise during the Asia-Pacific midday session, gaining 11.7 percent in three weeks. A worldwide reflation theme, quick Covid-19 vaccination rollouts, and a calibrated OPEC+ output plan are all helping the energy market. WTI is at its highest level in over two and a half years, extending its bullish trend with a target of $73.50, a crucial chart resistance.
As the pandemic fades, more Americans are venturing outside and resuming their daily routines. More than half of all individuals in the United States have been fully vaccinated against Covid-19, with the government aiming for more than 70% of adults to receive at least one dose by July 4th. For the first time since the epidemic, daily air travelers in the United States reached 2 million, indicating high demand for gasoline as the summer travel season approaches.
On the other hand, a stronger US Dollar may put downward pressure on commodities prices, reducing oil’s positive potential. This could be due to increased tapering fears, as demand for the Federal Reserve’s reverse repo set an all-time high on Friday, showing increased liquidity at financial institutions. This enhances the case for the Fed to taper asset purchases, putting this week’s FOMC meeting in focus.
Meanwhile, oil traders will be watching the EIA report on Wednesday for the most recent update on gasoline stockpiles. Even while Crude Oil inventories declined more than expected, an unexpected substantial gain in gasoline fuel stockpiles depressed prices last week (chart below). According to the agency, global oil consumption will recover to pre-pandemic levels by the end of next year, implying a bright future for energy prices.