Brent Crude Oil to extend its growth beyond $70 per barrel

Brent crude oil price has been on the rise ever since it hits its lowest price of $16/b in April 2020, when the price of West Texas Intermediate (WTI) May futures fell to an unprecedented negative price of around -$37/b. Brent crude oil's lowest price in over five (5) years.

The start of the pandemic year was bad in the financial market but it also ended on a very good note. Even though all stocks, commodities, futures, equities, metals, currencies, and cryptos took a hit during the pandemic, the recovery rate has been really impressive as they have all recovered their losses and added a little gain on top of that.

According to the U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook released on May 11, 2021, Brent crude oil will average $65/b during the second quarter of 2021 and the average $61/b in the second half of 2021.

Brent crude oil price is currently trading at $68/b as at the time of publication and more upside is expected as the Organization of the Petroleum Exporting Countries (OPEC) and OPEC partner countries have placed a limitation on the supply of oil. OPEC also announced its plan of increasing oil production, with each adjustment being no more than 0.5 million barrels per day at its April 2021 meeting.

The price of Brent crude oil increased to $71/b in early March 2021 before crashing back to $61/b towards the end of March. Averaging a price of $65/b for March. It has been on a steady rise in April 2021 from the $61/b price level and it's gradually approaching the March high in May. The rise in the price of Brent crude oil is due to an increase in oil demands as COVID-19 vaccination rates have increased and economic activities have picked up. Many organizations can't wait to resume fully at the office as vaccination spreads across the globe.

Another reason why the price of Brent crude oil has been increasing is because of the falling US dollar, coupled with global economic recovery and stimulus spending in the US. High confidence in global economic recovery is, typically, considered to bring weakness in the US dollar, which has fallen by around 12% against a basket of top currencies since the beginning of the pandemic. In addition, the availability of vaccines is bullish for oil prices as this would allow people to resume life in a normal way supporting more consumption-led spending that would drive up the oil prices.

Technically, the price of Brent crude oil is now trading at 2020 high, which was made in Jan. 2020 before the pandemic hit the world economy. The 200-day moving average and the 50-day MA are still indicating that the market is bullish, and this is the first time in two (2) years that oil price will trade comfortably above the 200-day MA.