Oil bulls seem to be in high spirits before the US summer driving season kicks off this weekend.
The global commodity is heading for its fifth weekly gains thanks to the improving demand outlook and signs of tight supply amid ongoing geopolitical risks. While oil prices have the potential to push higher as the fundamentals favour bulls, there are some themes that could limit upside gains. The Covid-19 restrictions in China could weigh on the demand outlook, especially if continues to impact growth in the world’s largest energy consumer.
Looking at the technical picture, Brent seems to be pushing higher on the daily charts. Although there have been consistently higher highs and higher lows, prices seem to remain within a wide range with support around $100 and resistance around $115. A breakout above $115 could open the doors towards $120 and $131. Alternatively, a decline back below $109 could signal a selloff towards $100.
It will be interesting to see how oil prices react to the virtual OPEC+ Ministerial meeting on Thursday 2nd June.