Moving towards a $100?

WTI after OPEC meeting and ahead of Inventory reports.

Market analyst – IFC Markets

Yesterday Oil market witnessed a sharp rise in prices to their highest levels since 2014. When we look at the chart, whenever the price moved above $80, continued to move towards $100.

Yesterday, OPEC+ ministers, decided to implement the main and current plan, which is to increase production by 400,000 barrels per day per month. Before the meeting, many investors and analysts had predicted that Organization will increase the supply due to a shortage in the market and higher prices. 

Yesterday, prices in the oil market expanded by about 4%, and today this movement continued by another 1.5%, to test a new record high since 2014. Earlier in past weeks, US hurricanes, offshore oil spills, and facility closures dragged down local crude oil production and caused another increase before this jump. 

On the other hand, we have the energy crises still unsolved, all around the world! China has a power shortage, the EU had Gas crises, same as the US and UK has a deficiency in gas stations, mostly because of the driver shortage. With the soaring prices of natural gas and coal, demand for WTI is expected to increase by 200,000 to 300,000 barrels per day in the following winter. With inventories reaching historical lows, supply constraints, and demand rising, energy prices are expected to still have this opportunity to increase even more in the fourth quarter. 

In the short term, we should not forget that higher WTI prices, will directly increase the prices in other markets as well, including industry, wholesale and retail, and transportation, which finally will increase the consumer prices (Inflation). 

Today API and tomorrow EIA reports will publish, and we have to closely follow the US Crude Oil inventories. These reports directly will affect the market. 

From the technical point of view, all technical indicators also supporting the current uptrend, jumping and slight increase is the usual pattern of the WTI chart in the past two months. We can see this soft and sustainable growth in prices with RSI between 60 and 70, not less and not more in all timeframes under daily and 75 on the Daily chart. 79.25 and 80.25 are the next resistance above current levels. 


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