Bulls to take a breather on overbought conditions but outlook remains bullish
WTI oil price is consolidating within a narrow range under new multi-month high ($83.51) after falling 200DMA capped the latest bullish acceleration.
Overall picture remains bullish as the latest decision of OPEC+ group to further cut production lifted oil prices, while the International Energy Agency said it expected global demand to rise to a record high this year, mainly due to recovery in China’s oil consumption, adding to bullish outlook.
Reduced output and growing demand are expected to keep the oil market tight, but IEA warns that higher prices would hurt consumers and economic recovery, while OPEC+ says that Western monetary policy is to be blamed for slowdown in economic activity and high inflation reduces the value of the oil.
All these factors contribute to expectations that oil prices would rise further, although the action may pause for some time due to overbought daily and weekly studies.
Correction is likely to be shallow, with dips to be ideally contained above broken $80 level, reverted to solid support.
The WTI contract is on track for the fourth straight weekly gain which further firms bullish near-term structure.
Res: 82.94; 83.51; 84.00; 84.92
Sup: 81.75; 80.99; 80.00; 78.98