Crude Oil, WTI, Brent – Talking Points
- Crude oil prices continue to soar as supply constraints remain intact
- US Crude (WTI) breaks above key psychological level of $75.00
- Brent crude rises above $80.00 for the first time since 2018
Brent Crude Claims $80/b, WTI eyes $77/b
Over the past few weeks, oil prices have continued to proceed along an upward trajectory as commodity shortages remain a key concern for global economies.
As the vaccination program continues to gain traction, Europe and China’s energy crisis have continued to support the bullish narrative pertaining to oil prices over the past month.
With inflationary pressures on the rise, heightened volatility and production concerns have supported the strong rise in commodities, pushing Brent crude to $80.00, a level last tested in 2018.
Oil – US Crude (WTI) Price Action
After four consecutive weeks of gains, WTI crude oil is currently testing a key level of resistance at the psychological level of $76 in an effort to reclaim the July high at $77.11.
After pricing in the fundamental factors which remain at the forefront of risk sentiment, oil prices may likely continue to sustain the upward trajectory, at least for now.
If bulls are able to push through the key level of resistance at $77, a breakout towards $80.00 may be in the cards. However, fears of higher wage inflation from the US could increase hawkish Fed monetary policy expectations.
That may hurt WTI, and increased selling pressure could result in a resumption of the bear trend and a possible retest of psychological support at $70.00. Still, it seems that in the near-term, demand is poised to outstrip supply.
US Crude Oil (WTI) Daily Chart
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Meanwhile, the weekly chart below illustrates how Fibonacci levels from historical moves have provided additional support and resistance for oil prices over a longer period of time.
Introduction to Technical Analysis
Fibonacci
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While the 76.4% retracement of the July – August move will likely continue to provide support for the longer-term move at $73.47, the commodity channel index (CCI) has risen above 100, a potential indication that WTI may be entering into oversold territory.
US Crude Oil (WTI) Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
| Change in | Longs | Shorts | OI |
| Daily | 33% | -20% | 3% |
| Weekly | 68% | -47% | -13% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
