Crude Oil Prices Hit 2-Month High on Supply Squeeze, 2021 Top Eyed
CRUDE OIL OUTLOOK:
- Crude oil prices surge amid supply shortage despite OPEC+ output increase
- US inventories at the lowest in two years on supply chain woes, Ida impact
- WTI working on fifth day of gains, eyeing a path to 2021 high near $77/bbl
Crude oil prices stormed higher at the start of the trading week, with the WTI benchmark hitting a two-month high and tracking to issue a fifth consecutive day on the upside. Shortages appear to be driving the rally amid gaps in supply chains and lingering output disruptions following Hurricane Ida.
US inventories have dropped to the lowest since mid-October 2018 even as the number of active rigs rose to the highest in 17 months while the OPEC+ group of major producers have gradually eased production caps.Shipping costs have jumped to a 13-year high.
A quiet economic calendar offers few roadblocks to derail momentum Monday. Later in the week, inventory updates from API (Tuesday) and the DOE (Wednesday) are due. Monthly reports outlining market conditions and updating supply/demand projections from OPEC (Tuesday) and the EIA (Thursday) are also on tap.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices are testing above swing-high resistance at 74.23, with confirmation on a daily closing basis putting July’s peak just below the $77/bbl figure into focus. A bit of friction at 75.52 – a minor inflection point – may be seen along the way.
Neutralizing upward momentum probably demands a reversal that re-establishes a foothold below support at 72.17. That may mark a break of rising trend support guiding prices upward since late August. Probing below the $70/bbl mark might follow thereafter.
Crude oil price chart created using TradingView
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--- Written by Ilya Spivak, Head Strategist, APAC for DailyFX
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.