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Oil and other commodities feeling better this week

WTI Crude Oil Heading for $90 Ahead of OPEC Meeting

Posted Wednesday, February 2, 2022 by
Skerdian Meta • 2 min read

Oil and other commodities feeling better this week

Crude oil has been on the rise since April 2020, after US WTI crude dived to $-37.50. The price reversed back then, and it has been increasing ever since, with dips being bought aggressively, and there is little sign that the surge in the price of crude oil will slow down soon. Now WTI Oil is heading for $90, and some analysts predict that prices could go up to $100/barrel soon.

Brent crude oil reached $90/barrel earlier this week, for the first time in seven years, and it breached that level again today, showing that UK Brent crude will settle above that level. However, market participants are expecting the price to edge even higher. The latest round of jump was attributed to the tensions surrounding Ukraine and Russia, but fundamentally, the divergence between supply and demand is the key driver.

The OPEC oil cartel holds its monthly meeting today, amid high prices driven by supply shortages and geopolitical tensions. Despite downside risks due to the pandemic, looming rises in interest rates and tensions between Russia and the West, that are fanning fears that energy supplies will be disrupted, OPEC+ is expected to stick with the existing policy of a gradual increase of output targets for March. This will lead to further gains for crude oil.

WTI Oil Technical Analysis – Daily Chart

The support area around $62 held for the third time

Looking at the daily chart, crude oil has been finding solid support at moving averages once the price has moved above them. When the pace of the trend has been strong, smaller moving averages, such as the 20 SMA (gray) have acted as support. However, these moving averages were broken during the last retreat in November last year, when US Oil dived from $85 to $62. But, that is a support zone that stopped the decline.

Crude oil bounced off that moving average and resumed the uptrend, breaking above the previous highs. Now the pressure remains to the upside, and US WTI could reach $100, as already mentioned, so dips in oil should be seen as good opportunities to buy.