OPEC cut its forecast for 2021 growth in oil demand
Brent crude has switched into a consolidation mode since its rejection from March highs registered last week just above the $51 figure. Despite the retreat, downside risks look limited at this stage, with prices clinging to the $50 psychological level these days, suggesting oil traders could proceed to another bull run after the current consolidation.
However, the market will likely need a fresh catalyst to resume the ascent as vaccination hopes are not enough to push the prices higher amid rising coronavirus cases and new lockdown measures in some parts of the globe. Furthermore, the API report due later today could trigger a local retreat if the data reveals another rise in US crude oil inventories.
Meanwhile, OPEC on Monday cut its forecast for 2021 growth in oil demand, citing uncertainty surrounding the impact of the pandemic. The cartel cut its forecast to 5.9 million barrels a day, down 350,000 barrels a day from its previous projection. Today, the International Energy Agency revised down its global demand forecast by 50,000 barrels per day in the latest monthly oil market report. The IEA also noted that global demand will see the impact of vaccines in several months.
On the positive side, the dollar remains weak across the board, helping oil prices to stay afloat. The greenback could come under additional selling pressure later this week if the Federal Reserve strikes a hawkish tone during the upcoming monetary policy meeting that concludes on Wednesday.
From the technical point of view, Brent will likely manage to hold above the $48.50 region of a more pronounced downside correction takes place. In a wider picture, significant support is still represented by the ascending 20-DMA, today at $47.93. On the upside, a decisive break above $50 would pave the way towards the mentioned long-term highs.