Crude oil to rise further on tightening oil market and brighter demand outlook
WTI oil price rose to new 2 ½ month high, after a brief consolidation around pivotal Fibo barrier at $75.92 (61.8% retracement of $83.51/$63.63 descend).
Bulls for now ignore overbought daily studies and resume rally, in which the contract advanced around 8% in past two weeks.
Recent rally was fueled by growing expectations that the Fed may soon end its tightening phase, after raising interest rates by 500 basis points that hurt oil demand and pushed the price to a multi-month lows in May and June.
The latest decision of OPEC+ leader Saudi Arabia to further cut production, which was heavily criticized by the US officials, proved to be correct and already showed results, as oil price rose significantly.
Also, the expectations of the International Energy Agency that oil demand would hit a record high this year, due to easing concerns about high inflation and borrowing cost in the US, as well as expectations that post-pandemic recovery of China – world’s largest oil importer- would accelerate this year, add to positive signals, along with record increase of imports of Russian crude oil by Saudi Arabia.
Technical picture on daily chart is bullish and sentiment has improved, with close above pivot at $75.92 to signal extension of rally from a higher base at $67.00 zone, towards targets at $77.15 (200DMA) and $78.82 (Fibo 76.4%).
However, corrective action in coming sessions cannot be ruled out, with solid support at $73.57 (broken 50% retracement of $83.51/$63.63 / top of thick daily cloud.) expected to contain and keep overall bullish stance.
Res: 76.90; 77.15; 77.90; 78.82
Sup: 75.92; 74.70; 74.33; 73.57