The crude oil elevated during Friday’s trading hours above the $79 price level and the futures contract of crude oil ended at $79.85. At the beginning of the current week, the commodity is not easing the pressure. And the volatility of the crude is around 5.41%. The spark for the rally was due to the news from OPEC that the organization did not want to raise the crude supply.
The volatility, especially in the market with black gold shows the nervosity and little unstable development. The OPEC is not the only participant in this. China’s recovery is the main topic, as the country is on the list of top 3 consumers of crude oil, and therefore the demand side in the market is very crucial. Any news from China’s economic indicators has a significant impact on the development of the price of black gold.
China’s annual National People’s Congress brought several important information about the targets of the economy for this year. The GDP is awaited at least 5%, which was the top headline. The fact is that the results of congress were a little bit in a fog. Actions about increasing consumption, and prevention against inflation, especially in commodities, were mentioned. But not much specific about the process of achieving these goals.
You may be interested in: Copper rebounds off massive support – can it stay above $4?
Break above resistance
Thanks to Friday’s break to the $80 area, the crude oil is currently above several resistance levels. The black commodity tested the monthly VWAP levels set as supports at $76.85 and $78.81.
30 minutes chart of CL (Crude Oil Futures Contract), Monthly VWAP levels, source: author’s analysis
Moreover, from the long-term period, the CL is above the 200 EMA on 4 hours period basis. And what is more important, the price continues up, which means this average has become the important support at $77.76. To sum it up, the area from $76.85 to $78.81 could be important in the case the price will head down.
240 minutes chart of CL (Crude Oil Futures Contract), 200 EMA, source: author’s analysis
As was mentioned above, China is one of the top consumers of crude oil. Therefore the scenario of better economic conditions can support the price of crude. But strong nervosity can be seen in the markets, mostly based around the question whether China is able to hold the flag of economic recovery. Despite the fact that the world enters a recession, East Asia country belongs to the countries with the lowest inflation, which is 2.1%.