The crude oil price spiked today after the US Senate passed Joe Biden’s stimulus package during the weekend. The price also rose because of a major attack in Saudi Arabia by Houthi rebels and last week’s deal by OPEC+ to leave supplies intact.
What happened: The biggest stimulus package in history was passed during the weekend. This deal was positive for the price of crude oil because it means that there was more demand. In fact, the price has risen sharply in the past $4 trillion stimulus packages passed by the US.
Meanwhile, investors are bracing for supply shortages after the Houthi rebels attacked a major terminal in Saudi Arabia. Still, the extent of this shortage will be relatively muted since Saudi Arabia managed to intercept most of the attacks. However, it could lead to more volatile situation in the region that could affect the supplies. Further, the recent OPEC+ deal has also helped boost prices.
The daily chart shows that the price of Brent soared to $71. This was the highest it has been since January 8 last year. On the daily chart, the price is also above the 15-day and 25-day moving averages while the Relative Strength Index (RSI) has continued to rally. Therefore, in my view, the price of crude oil will find some resistance at this stage and then continue rising as bulls start to target the resistance at $80.
