WTI Crude Oil (CM:CL) closed slightly lower in Friday’s trading, falling $0.22 to settle at $81.04 per barrel. This drop can be attributed to a strong U.S. dollar (DXY) and mixed U.S. economic indicators, including a drop in the March Empire manufacturing survey and a decrease in consumer sentiment. However, oil’s longer-term fundamentals point to a bullish outlook.
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In fact, the International Energy Agency (IEA) recently projected that global oil markets will experience a supply shortfall throughout the year if OPEC+ sticks to its current production limits. This forecast is based on revised upward demand due to a more robust U.S. economy. It’s also worth noting that the longer maritime routes used to bypass Houthi assaults in the Red Sea are driving up demand.
If the global economy does indeed experience an oil supply shortage, it would boost prices. Nevertheless, OPEC+ will review its production strategy for the second half of the year in a June meeting. Depending on their decisions, this could shift the market balance.
Oil Technical Analysis
Using TipRanks’ technical analysis tool, the indicators seem to support the bullish thesis laid out by the fundamentals. Indeed, the summary section pictured below shows that 16 indicators are flashing Buy signals, compared to three neutral and two bearish indicators.
Here is a list of energy stocks that can be influenced by the latest developments in the energy markets.
