WTI Crude Oil bulls accumulating energy for a new surge, levels to watch

Where next for oil prices? After WTI Crude Oil surpassed the $90 level, a user has asked us this question. The short answer is that the trend remains to the upside, amid high global demand and just not enough supply, eyeing $91.80 (recent high) and then $94 and $95.30 (Fibonacci levels).

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The longer answer is that despite Omicron-related disruptions and fears that higher inflation would stall growth, demand for oil remains high. Saudi Arabia has raised rates for customers in Asia and the US, feeling confident. OPEC+ countries – led by Russia and Saudi Arabia – os only gradually raising output.

It is also essential to remember that the Russian troop buildup on the Ukrainian border adds to speculation of a war, which would be disruptive to global supplies. Perhaps the only bearish news comes from Iran. Nuclear talks between the Middle-Eastern nation and global powers has seen some progress according to recent reports. If Iran returns to the global scene, it would weigh on prices. 

WTI Oil Technical Analysis

Technically, the 4h-RSI is flirting with the 70 level, which implies a temporary downside correction on WTI Crude Oil. Support is at the recent low of $90.10, followed by $88.80, a swing high from last week, and then $87,  aswing high from late January. 

Once this consolidation phase concludes, bulls may take over, pushing oil prices to the recent high of $91.80,  then followed by $94, which is the 138.2% Fibonacci line when drawing a Fibonacci retracement from the cushion of $85.85 to $91.80. Further above, $95.30 is the 161.8% Fibonacci level. 

Overall, there is room for a short-term correction followed by further gains. Goldman Sachs, a bank, foresees a steady path to $100 later this year. High oil prices tend to prompt new investment in drilling, resulting in lower prices at some point. It also makes renewable energy more attractive. However, the gap between investment and the point at which oil begins flowing is a period without enough supply, pushing prices higher.