Oil price rises on renewed supply concerns
WTI oil advanced around $8 in a strong recovery that extends into third straight day, lifted by renewed supply concerns.
Growing worries that OPEC members Saudi Arabia and United Arab Emirates, the only two cartel-member countries with spare capacity available to cover up for lost Russian supply, are unlikely to significantly increase production, while unrest in Libya adds to supply concerns.
Higher oil prices add to already complicated economic situation on supporting high inflation, but fears that strong tightening of the monetary policies by the major central banks would lead to economic slowdown and subsequently towards recession, keeps lid on oil prices.
Fresh extension higher on Tuesday broke above important $110 barrier (psychological / Fibo 38.2% of $123.65/$101.52 fall) with sustained break higher to add to revived near-term bullish bias, but caution is required as rising negative momentum on daily chart and overbought stochastic, warn of recovery stall.
Bulls eye next pivotal barriers at $111.91 (Fibo 61.8%) and $112.59 (daily Kijun-sen), violation of which would improve near-term structure and allow for further recovery, but risk that these levels would cap current recovery, should be also considered.
Res: 111.91; 112.59; 113.46; 114.22
Sup: 110.00; 109.03; 108.28; 107.06