WTI capped in bullish territory, RSI confirm further upside

  • WTI capped at multi-year highs, 10-D SMA is the first line of key support.
  • Geopolitical angst and supply concerns help boost the price of oil.

The price of oil had been making fresh highs on Thursday. WTI  rallied to $72.37 bbls. Currently, however, it trades at $71.37bbls, below the 10 4-hr SMA and has made a recent low of $71.21 bbls, held up at the 21-4hr SMA within the rising channel, supported by the 10-D SMA. 

Oil got a boost today on the back of geopolitical risks and strong global demand during the US driving season. Brent crude rallied t above $80 a barrel due to Washington’s decision to reinstate sanctions on Iran, sending prices to their highest levels since 2014. Both WTI and Western Canada Select extend their rallies to fresh multi-year highs as well. 

On the geopolitical front,  the U.S. has said it is possible there will be secondary sanctions imposed on European companies who continue to deal with Iran and European companies are already starting to pull back from Iran. The French energy major Total SA  said Wednesday that it would withdraw from a major gas project in Iran this year if it wasn’t granted a waiver by the U.S. However, it begs the question as to the extent to which a return of U.S. sanctions will limit Iranian oil production, but at this stage, it seems that the U.S. has a strong hand over it. 

IEA revised lower its outlook for global oil demand for 2018

IEA has revised lower its forecasts for global oil demand for the current year to 1.4 mbpd from 1.5 mbpd. On Friday, driller Baker Hughes will report on the US oil rig count.

WTI levels

73.00 comes as the psychological level in WTI ahead of 77.80 around the 21st Nov 2014 high. On the flip side, $70.64 (10-day SMA) guards $69.27 (21-day SMA) and  66.86 (low as of 1st May). RSI on the daily, weekly and monthly sticks has room to go overbought.

DXY still correlates, warning to bulls as dollar reaches toppy levels in a correction within broader bear trend - time for a bearish correction?: 

  • WTI and DXY breaking the rules, investors wait to see if correlation can last

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