|

WTI rallies over 3.5% on the day, EIA boosts price forecasts

  • WTI bulls step in despite the risks of covid spreading like wildfire.
  • Supply risk remains a key driver, all eyes on OPEC+ group's effective spare capacity.

Oil trades much higher early on Tuesday with West Texas Intermediate, WTI, up over 3.5%bbls at the time of writing after a rally from $78.39nnls that reached $81.56bbls. The rally comes despite the spread of the Covid-19 omicron variant and the return of supply from Libya.

Libya has begun to normalize after a militia group agreed to resume output at the country's largest oilfield while pipeline repairs were completed. However, there have been reports that the nation's biggest export terminals are shuttered due to poor weather conditions.

As for Omricon, the World Health Organization has warned that 50% of Europeans could be infected with Covid-19 over the next two months. China has also increased lockdown measures to lower cases ahead of next month's Winter Olympics. In the US, cases have climbed to a record. However, markets are preferring to stick with the sentiment that the variant results in more mild cases. 

Elsewhere, and despite rising inventories today, the EIA boosted its price forecast for Brent crude, expecting it to average US$74.95 per barrel this year, up from its December estimate of US$70.60. WTI is forecast to average US$71.32 per barrel this year, an increase from the December estimate of US$67.87.

Nonetheless, ''supply risk remains a key driver with the OPEC+ group's effective spare capacity effectively concentrated between just a few nations, as operational risks mount following a decade of underinvestment,'' analysts at TD Securities argued.

''In the meantime, while the Omicron variant's higher transmissibility has correlated with mobility restrictions, resilient driving mobility and factory activity are providing an offset for energy demand. In this context, energy supply risks continue to rise despite the OPEC+ group's decision to raise output,'' the analysts added.

''US production is still recovering at a slow clip, with capital expenditure budgets for the new year still suggesting that capacity will also remain capped. With that said, the bar is extremely low for CTA trend followers to add to their longs across the complex.''

WTI US OIL

Overview
Today last price80.73
Today Daily Change2.76
Today Daily Change %3.54
Today daily open77.97
 
Trends
Daily SMA2074.44
Daily SMA5074.89
Daily SMA10075
Daily SMA20071.36
 
Levels
Previous Daily High79.02
Previous Daily Low77.44
Previous Weekly High79.97
Previous Weekly Low74.12
Previous Monthly High77.26
Previous Monthly Low62.34
Daily Fibonacci 38.2%78.04
Daily Fibonacci 61.8%78.42
Daily Pivot Point S177.26
Daily Pivot Point S276.56
Daily Pivot Point S375.68
Daily Pivot Point R178.85
Daily Pivot Point R279.73
Daily Pivot Point R380.44

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Editor's Picks

GBP/USD softens to near 1.3550 on geopolitical tensions, hawkish Fed bets

The GBP/USD pair trades with mild losses around 1.3550 during the early Asian trading hours. The US Dollar edges higher against the British Pound amid ongoing Middle East tensions and Federal Reserve Chair Kevin Warsh's hawkish remarks at the Jackson Hole symposium.

EUR/USD struggles near 1.1600; looks to Eurozone HICP for some impetus

The EUR/USD pair struggles to capitalize on the overnight bounce from the 100-day SMA, near the 1.1575-1.1580 region, or a one-and-a-half-week low, and drifts lower during the Asian session on Tuesday. Spot prices currently trade around the 1.1600 mark, down nearly 0.10% for the day, amid modest US Dollar strength as traders now look to the preliminary reading of the Eurozone Harmonized Index of Consumer Prices (HICP).

Gold: Defending $4,400 is critical for buyers

Gold fades Monday’s rebound from eight-day lows, reverting toward $4,400 early Tuesday. US Dollar bounces sharply amid US-Iran tensions-led risk aversion and hawkish Fed bets. Gold attacks 21-day SMA near $4,400 after defending it on Monday; RSI still bullish.

Ripple, Cardano, and Dogecoin show weakness – Crucial EMAs in focus

Ripple, Cardano, and Dogecoin remain weak after double-digit losses last week, testing their crucial Exponential Moving Averages for immediate support. The technical outlook warns of further weakness in the prices of XRP, ADA, and DOGE as bullish momentum eases.

Fed Chair Warsh runs open-mouth operations at Jackson Hole but can he deliver?
Federal Reserve Chairman Kevin Warsh moved markets on Friday with his Jackson Hole speech, even though the central bank has yet to do anything to move inflation. Clearly, Warsh wants to convey a message. He’s tough on inflation, and the Fed will “deliver price stability.”
Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.