Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Key themes and the outlook for oil prices in Q2 2021

In this article we look at how oil prices have reacted to demand and supply side pressures as well as provide a trading outlook for these commodity prices in Q2 2021.

Brent crude and WTI oil prices up more than 20% year to date

The prices of Brent crude and West Texas Intermediate (WTI) oil have gained more than 20% for the year to date. Gains in the commodity have been reflecting the suggestion of increasing demand with global economic activity picking up while Covid-19 vaccine rate speeds up as well. While demand prospects for oil have improved, the supply side has seen ongoing production curbs from members of the Organization of the Petroleum Exporting Countries (OPEC) and its ally countries (OPEC+).

Key supply and demand side drivers for the oil price

The future of oil prices will remain subject to these catalysts going forward, namely future production decisions by OPEC+ and the pace of demand growth (which will be linked to the speed of the post-Covid economic recovery).

Production of crude oil is expected to see a pickup in May, as guided by OPEC+ in early April. The production increase will be furthered by the unwinding of voluntary output curbs from OPEC’s largest producer Saudi Arabia. The US Energy Information Administration (EIA) predicts that these factors will see an increase in OPEC production from 25.1 million barrels per day in first quarter (Q1) 2021 to 25.8 million barrels per day in Q2 2021, while the production figure could increase to as much as 27.9 million per day in the second half of 2021. The EIA has also forecast US crude production to remain relatively flat in the second quarter from the first quarter.

In terms of consumption, OPEC+ has forecast an increase in demand to primarily be realized in the second half of 2021, expectant of a year on year increase of around 5.89 million barrels per day.

Brent Crude oil price: technical analysis

The price of Brent crude could be forming a bearish head and shoulders pattern, as highlighted on the chart. This pattern is not yet confirmed. To confirm the head and shoulders reversal, the price would need to close below the $60.30 support level. This scenario would constitute a downside break and possible reversal in the longer-term trend from up to down.

$65.30 provides upside resistance for the price of Brent. For now the price trades within a range between $60.30 and $65.30. Should the price break above range resistance at $65.30, the head and shoulders pattern would lose its relevance and instead a short-term bullish bias would once again be assumed.

WTI oil price: technical analysis

Similarly to Brent crude the price action on WTI oil could be forming a bearish head and shoulders pattern, as highlighted on the chart. This pattern is not yet confirmed. To confirm the head and shoulders reversal, the price would need to close below the $57.20 support level. This scenario would constitute a downside break and possible reversal in the longer term trend from up to down.

$61.75 provides upside resistance for the price of WTI. For now the price trades within a range between $57.20 and $61.75. Should the price break above range resistance at $61.75, the head and shoulders pattern would lose its relevance and instead a short-term bullish bias would once again be assumed.

In summary

  • WTI and Brent crude oil have gained more than 20% in the Q1 2021
  • Gains in oil have followed extended supply curbs by OPEC+ and demand side assumptions on a return to economic growth
  • Q2 2021 is likely to see a marginal increase in output from OPEC+
  • WTI and Brent charts show short term trading ranges for oil prices with the emergence of head and shoulders patterns (incomplete) cautioning the possibility of a longer term trend reversal

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

React to volatility on commodity markets

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years

1In the case of all DFBs, there is a fixed expiry at some point in the future.

See opportunity on a commodity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a commodity?

Don’t miss your chance. Upgrade to a live account to take advantage.

  • Analyse and deal seamlessly on fast, intuitive charts
  • Get spreads from just 0.3 points on Spot Gold
  • See and react to breaking news in-platform

See opportunity on a commodity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.