WTI Oil outlook: Price rises further on supply concerns over the latest US sanctions on Russia

WTI

WTI oil price spiked to new multi-month high ($78.66, the highest since Aug 14) on Monday, as steep bull-leg off $72.83 higher low, extends into third consecutive day.

Growing supply concerns on the newest US sanctions on Russian oil industry strongly inflated oil prices, with expectations that WTI price could rise to $85 per barrel.

The US aims to hurt Russian exports to China and India, world’s first and third oil importers, in continuous attempts to weaken Russian economy, after the military component of the conflict showed unsatisfactory results.

Obviously, the sanctions used as a weapon in conflict, so far did not significantly hit the Russia despite a number of packages of sanctions imposed and will be interesting to watch the reaction from OPEC (where Russia play important role), as well as China and India, which will be directly hit by the newest decision.

It is also important to mention that oil prices were not hit significantly from the war (except a spike above $100 in early stage of war), remaining resilient even during the escalation of the new conflict sparked in the Middle East last year.

So far, all sanctions (particularly those in energy sector, one of Russia’s key sources of income) caused more damage to those that imposed the sanction (except the US) and more important, did not cause any significant disruption in oil production and supply, keeping the oil market in a steady run.

This implies that current rally might not last long and probably without significant impact on the larger picture, as long as oil price stays below $90 per barrel.

Technical picture remains firmly bullish on daily chart, with Friday’s break above 200DMA and formation of 5/200 DMA golden cross, adding to positive outlook, however overbought conditions may boost headwinds that bulls feel at the zone of former top at $78.45 (Oct 8 peak).

Today’s Asian session low ($76.65, also broken Fibo 38.2% of $95.00/$65.26 / 100WMA) marks initial support, with extended dips to ideally hold above broken 200DMA ($75.10) to mark a healthy correction and keep bulls in play for retest of $78.45 and attempts through weekly cloud base ($78.99) towards $80 target (psychological, reinforced by 200WMA).

Res: 78.56; 78.99; 80.00; 81.35.
Sup: 76.65; 75.10; 74.71; 72.83.

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