Crude Oil Forecast – WTI Retains Bullish Profile Amid Rising Geopolitical Risks

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  • Despite being overbought, crude oil costs keep a constructive outlook within the brief time period
  • Geopolitical tensions in Eastern Europe creates upside dangers for commodities within the power house
  • The technical bias for WTI can be bullish

Most learn: Crude Oil Prices Flirt With $90 Amid Iran Nuclear Talks, Falling Inventories

WTI oil costs have rallied aggressively and nearly uninterruptedly over the previous ten weeks, surging greater than 40% from their December lows to commerce above $91 per barrel, amid stabilizing financial restoration and supply-demand imbalances within the commodity market. While OPEC+ has been steadily unwinding the report manufacturing cuts agreed on the onset of the COVID-19 pandemic, many cartel members have failed to satisfy output quotas because of capability constraints following years of underneath funding, at a time when world stockpiles sit close to seven-year lows.

Simultaneously, geopolitical tensions in Eastern Europe have added upside threat premium, contributing to the bullish momentum seen within the power house. Although the state of affairs is fluid, buyers imagine that Russia, which has amassed heavy artillery and greater than 100,000 troops close to the Ukrainian border, could invade its western neighbor in a matter of weeks and even days. The White House has admitted that diplomacy has to this point been unsuccessful in persuading the Kremlin to de-escalate and has inspired U.S. residents to go away Ukraine instantly amid fears {that a} navy battle may quickly get away within the area.

Should President Putin give the inexperienced gentle for an invasion, the United States and its allies are prone to swiftly impose robust financial sanctions on Russia, the world’s second largest oil producer and a key provider of pure gasoline to Europe. We have no idea for certain how the state of affairs will play out, however many consultants worry that Moscow may retaliate for being the goal of punitive motion and lower off power provides to European nations, inflicting crude oil and pure gasoline costs to rise sharply.

Against a backdrop of heightened geopolitical frictions, merchants can be reluctant to take massive bearish positions on oil, making a major pullback unlikely presently, regardless of indicators that the market has been overbought, with WTI and Brent buying and selling greater than 20% above their 200-day easy transferring common and the 14-day RSI flirting with the 70 stage in each circumstances. This state of affairs creates upside dangers for oil.

Turning to technical evaluation, WTI has been transferring inside the confines of an ascending channel since mid-December, a bullish sign for the market. If consumers keep the higher hand, the commodity may head increased and retest its yearly excessive of $93.15. Prices may very well be rejected at that key resistance, but when the realm is breached on the topside, the channel’s higher boundary close to the $97 psychological stage would turn out to be the quick upside focus.

On the flip facet, if WTI takes a flip to the draw back and breaks beneath channel assist close to $89.25, promoting exercise may speed up, paving the way in which for a transfer in direction of $86.00, a flooring created by the 23.6% Fibonacci retracement of the December-February rally. If the value drops beneath this area, the 38.2% Fib stage close to $81.5 would come into play.


WTI Crude Oil chart ready utilizing TradingView


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—Written by Diego Colman, Market Strategist & Contributor

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