Oil prices jumped to a 2-year high yesterday, completing a record 520% move higher from last year’s pandemic low in April.
The Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing nations, announced a boost in output for July to 2.1 million barrels per day.
Much of this was already expected as this was an agreement made in April. However, they have kept market participants waiting for what will happen beyond July as the group, led by Saudi Arabia, aims to balance a surge in demand with the potential for higher Iranian oil output.
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Source: Admirals MetaTrader 5, CRUDOIL, Monthly – Data range: from Sep 1, 2013, to Jun 1, 2021, performed on Jun 1, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
From a technical analysis perspective, oil prices have just broken a key horizontal resistance line around ~$67.00. This was a multi-year high before being broken yesterday.
While oil prices have been surging higher for some time, there is potential for the price to run further if it can hold above this level.
The next major level of resistance is the $76.00 price level as shown by the top black horizontal resistance line in the chart above.
Source: Admirals MetaTrader 5, CRUDOIL, Daily – Data range: from Sep 7, 2020, to Jun 1, 2021, performed on Jun 1, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
However, if this break higher proves to be a false breakout then the price could fall back to the lower ascending support level, as shown in the chart above.
This would mark a failed break of the ascending triangle pattern that has formed, signifying a potential break from the lower support level.
Either way, oil prices will remain at the top of most traders’ watchlists.
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