WTI Crude Oil
The crude oil price is in a tight range as investors reflect on the supply and demand dynamics. Brent, the international benchmark, is trading at $78 while the West Texas Intermediate (WTI) is trading at $76.
The price of crude oil has jumped in the past few months as investors reflect on the demand and supply dynamics globally.
In a recent report, OPEC said that oil demand will likely soar to above pre-pandemic highs in 2022. Precisely, the report said that demand will increase to more than 100.8 million barrels per day in 2022.
In another report, the International Energy Agency, the Paris-based agency, said that it expects that demand will keep rising in the next few months.
As demand rises, OPEC+ has continued to limit its supplies. While this would be a good thing for US producers, the reality is that they are not increasing supplies as they should. Therefore, these dynamics could keep pushing prices substantially higher. OPEC+ will hold an important meeting today. Analysts expect that the cartel will maintain its supplies at the current pace.
Meanwhile, the crude oil price is reacting mildly to a new oil spill in California. The spill by a platform operated by Amplify Energy saw more than 126k gallons spill at sea. The impact of the spill will be relatively muted.
The four-hour chart shows that the crude oil price soared to a high of $80.66 in September. This was the highest the price was in the past three years. As it rose, it moved above the key resistance level at $77.86, which was the previous highest point.
The price is trading at $78.92, which is slightly above the 25-day and 15-day exponential moving averages (EMA). It is also slightly above the key support level at $76.52.
Therefore, this price action is just a pause after oil prices staged a major rally and tested a key resistance level. As such, the path of the least resistance for oil is in the upside, with the next key resistance level being at $90. It will likely rise to this level in October 2021.
On the flip side, a drop below the support at $76 will invalidate this trend.