WTI surges above $84.00 for the second day in a row amid broad US dollar strength
- WTI extends its three-month rally, and prices have increased 37% since August 2021.
- The market sentiment is upbeat despite overall US dollar strength across the board.
- Saudi Aramco CEO said that if COVID-19 eases as expected and more people fly, it would be a crude oil supply deficit.
Western Texas Intermediate (WTI) US crude oil benchmark rises during the New York session, short of Monday's tops, trading at $84.30 at the time writing. The market sentiment has remained upbeat as US stock indices remain supported by US Q3 solid corporate earnings, which helped ease investors' nervousness around high inflation and central bank monetary policy tightening.
In the meantime, the US Dollar Index, whose price influences commodity prices, is rising 0.18%, sitting at 93.98 at press time
Crude oil prices lie in the hands of the OPEC+ and the increasing demand for it as the energy crisis worsens. On Tuesday, Amin Nasser, CEO of Saudi Aramco, said that capacity worldwide is dropping quickly, and companies need to invest more in production. His comments come as the US, among other countries, have called OPEC+ to increase the current output.
Nasser added that if the coronavirus pandemic eases as expected and more people fly, the supply deficit could worsen in 2022.
Despite the abovementioned, the Organization of Petroleum Exporting Countries and its partners (OPEC+) stick to the 400,000 daily output increase each month. The group led by Russia and Saudi Arabia will meet on November 4 to decide whether to keep or change the strategy.
WTI Price Forecast: Technical outlook
WTI's upward move is overextended, portrayed by the Relative Strength Index (RSI), which is at 74 and has remained in overbought levels since October 11, showing no signs to move lower. The daily moving averages remain well below the price, with an upward slope, supporting the upward bias.
A sustained upside break above $84.00 could open the way for a $91.00 challenge, but crude oil dynamics also lie in fundamental developments. So, in this case, cautions is warranted. The first resistance level would be $85.00, subsequently followed by $86.00.
In case of a correction lower, the first meaningful support level would be the July 6 high at $77.00.
WTI KEY ADDITIONAL LEVELS TO WATCH
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
