A price in the mid-$70-per-barrel range is a key area that oil has been unable to move past since 2014, writes Tom Essaye, founder of Sevens Report Research. It last touched $76 in November of 2014 and hit $74 in 2018, before falling promptly. As the economy reopens and oil being tight for the past couple of months, OPEC finally came up with a plan to increase its supply to meet the recent strong demand. Production has been running at around 6 million barrels per day recently.
Analysts are also concerned about the capacity of economic growth. Although the economy reopening is fueling a strong rally across multiple industries, there is no guarantee how long the growth will last. And when the time of a slowdown comes, crude oil demand will slip as well. “The [oil] rally has lost momentum amid the growing fundamental uncertainties,” Essaye says. “Energy markets are likely to trade sideways… until traders gain clarity on those new fundamental uncertainties.”
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