Crude oil prices have regained the $60.00 mark today after soaring to trade about 2% higher on the day.
Fundamental analysis: Recovery in demand expected
Two factors could help crude prices move slightly higher as oil continues to see gains in 2021, according to JP Morgan.
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The bank’s statement comes as a result of the improving global outlook, helped by ongoing Covid-19 vaccination initiatives around the world.
“I think there’s room for oil prices to move a little bit higher in this environment but, you know, not thinking about a price of $80 or $90 a barrel. Maybe it goes up by $5 or $10 more from here,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
Craig said that the first factor that could drive oil prices higher is the expected demand recovery as the world economies continue to heal from the pandemic.
Furthermore, a devastating winter storm in the southern part of the U.S. has led to power outages in Texas, landing a heavy blow to the state’s infrastructure and taking millions of BPD of oil production offline. As a result, energy prices have surged.
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Technical analysis: 100-MMA stops the advance
Oil prices have lost some of that momentum in recent days after the price action hit a 13-month high of $62.25. Oil prices have gained for four consecutive months to gain nearly 80% since the beginning of November.
The price action stopped above the $62 handle after meeting the 100-MMA. The last time crude oil prices touched this technical indicator was in October 2018, when the price action also rotated lower after a brief encounter. This area will continue to offer strong resistance to oil traders, with near-term support located around $58.
JP Morgan analyst Kerry Craig said that two factors could drive oil prices slightly higher this year as the global economy continues to recover from the coronavirus pandemic.
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