WTI outlook: Oil price rises to four-month high on supply concerns
|WTI oil rose further on Wednesday (in extension of Tuesday’s 2.9% advance) and hit the highest in four months ($63.50).
Weakening dollar, disrupted US crude output due to heavy winter storm which halted production and recent outages from Kazakhstan supplies after Ukrainian drone attack, were mainly behind the latest acceleration, while market participants closely monitor developments in the Middle East, following latest threats of US attack on Iran.
In the worst scenario of conflict escalation, Iran may close the Hormuz straight and cause panic reaction in the market that would make oil prices skyrocketing.
The latest rally broke significant barriers at $62.18 (200DMA) and $62.69 (50% retracement of $70.50/$54.87) with close above needed to verify bullish signal and open way for further upside ($64.53, Fibo 61.8% retracement marks next significant barrier).
Meanwhile, bulls may take a breather for consolidation as Stochastic is overbought and positive momentum starts to fade.
Broken 200DMA reverted to solid support which should ideally hold, though deeper correction cannot be ruled out, with $61.02/$60.84 (rising daily Tenkan-sen / broken Fibo 38.2%) expected to hold and keep bulls in play.
Significant rise in oil prices in January (nearly 10%) leaves long bullish candle and contributes to formation of reversal pattern (still in early stage) on monthly chart.
Res: 63.50; 64.00; 64.53; 65.00
Sup: 62.18; 61.45; 61.02; 60.84
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.