Chart Of The Day - Crude Oil Price

Crude oil prices now up more than 30% off the lows...

Crude Awakening: WTI crude oil has notched up a substantial 30%+ rally off the lows, and is now pushing up against a key resistance level (around ~$90/bbl), which if breached will open up the path above $100. Interestingly this has come with declining volatility (an orderly move).

• Aside from the failed breakdown below a key long-term support level, WTI crude has also notched up a golden cross (50-day moving average crossing above the 200-day), and has busted comfortably through multiple short-term resistance levels.

• While the technicals look good, the fundamentals are also decent with world oil demand breaking out to new post-covid highs, and supply growth constrained by multiple factors.

• The steady move lower in crude oil implied volatility shows there is an air of certainty around the rally in oil prices (which at some point might become complacency). But one implication of this move will be increased uncertainty across the rest of markets as the oil rally threatens to trigger inflation resurgence and higher bond yields.

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