Being an oil bull is not as lonely as it was a few months ago as the bullish fundamentals are becoming clear even to the most die-hard bears. Despite skepticism that OPEC+ could keep it together and reduce global supply, there’s now no doubt they can.
While the markets reacted to the storming of the Capitol with a quick drop and a spike in the VIX Index, the resilience of the market suggested that, despite the unrest, there is unwavering confidence in the United States.
The happy mood could even support oil, which, though still in an uptrend, has been reluctant to breakout higher as Covid-19 demand destruction concerns continue to cause worry.
Oil prices are slipping as a new strain of Covid-19 overshadows a relief package that Congress finally passed, along with rising concerns that Russia is getting trigger-happy on increasing oil output.
Oil prices are barely impacted by American Petroleum Institute (API) data and instead focusing on record-breaking Chinese refinery runs.
The increase was enhanced by a record amount of oil imports into the Gulf Coast and was probably impacted by the holiday and the booking of supply.
Global oil markets are in flux as we all wait to see if OPEC and their favorite co-conspirator Russia can agree to a production deal and avoid another all-out price war.
The drama is putting the oil bull market in jeopardy, and if it weren’t for the fact that the UK approved the first Covid-19 vaccine in the Western world, the oil market might have been hit harder.
More news on Covid-19 vaccines is raising oil demand prospects in the short term and the longer-term has oil trading at a 3-month high, and the best is yet to come.
While the market showed some disappointment with the OPEC+ non-decision, it rallied back, as the global outlook for future demand improves.