CME Group’s flash data for crude oil futures markets noted traders extended the uptrend in open interest and added around 15.6K contracts on Tuesday. Volume followed suit and went up by around 11.2K contracts, partially reversing the previous drop.
WTI remains focused on $82.60
Prices of the WTI charted a decent advance on Tuesday, coming back after dropping to 3-week lows near $76.60. The rebound was amidst increasing open interest and volume and is supportive of the continuation of the bounce at least in the very near term. Next on the upside for the commodity comes the YTD top at $82.60 per barrel (January 23).
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Recent weeks have seen the price of crude oil futures make a recovery from the lows of the winter and spring. This trend appears to be set to continue, as recent developments and broad economic conditions appear conducive to further gains in the price of oil.
The intervention of various countries in the crude oil market has been a major factor in the recent price rebound. Countries such as Saudi Arabia, Kuwait and the UAE have ramped up efforts to boost production and reduce costs. This has helped to absorb a portion of the surplus in the market and push up the prices of crude oil futures.
From a global economic perspective, the fundamentals are also looking encouraging. The world’s leading economies remain strong, and this is reflected in the improving performance of crude oil futures. In addition, many countries have recently introduced measures to boost domestic demand, which is expected to result in an increase in the demand for oil.
Finally, the overall geopolitical climate appears unchanged, with market participants expecting little in the way of major conflicts or security risks. This means that future volatility in the prices of crude oil futures is likely to remain muted in the near future.
In summary, the building blocks are in place for the further recovery of crude oil futures. This is expected to be driven by production interventions, domestic economic growth and geopolitical stability. All in all, further gains in the price of oil are likely in the weeks and months ahead.