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Crude Oil Soars to New Heights 

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  • Crude oil prices rise as supply and demand variables clash;
  • Supply concerns persist as OPEC+ fails to produce; and 
  • Energy demand rises as the northern winter approaches. Will WTI continue to rise? 
  • Crude oil extended its gains from last week in Asian trade on Monday. With storms building in the northern hemisphere, geopolitical worries, supply limits, and option hedging all in play, the energy commodity looks to have few options for the time being. 
  • Tensions near the Ukraine-Russia border continue to grow as Moscow sends additional troops to the region. A dispute in this region threatens European energy sources and has heightened global oil supply concerns.
  • The Pentagon has declassified a number of military intelligence records revealing the development of armaments. They have also alluded to a misinformation campaign within Ukraine that they claim was sponsored by Russia. 
  • In recent weeks, a number of analysts and journalists have predicted that oil prices will rise over $100 per barrel. With OPEC+ failing to deliver on its recent output hikes in full, their projections are approaching. 
  • OPEC+ is expected to meet on Wednesday to discuss output objectives. 
  • Above $90 bbl, option underwriters may begin to hedge their risk. According to Bloomberg statistics, the number of calls issued substantially outnumbers the number of puts over $90 bbl.
  • As the price of oil rises, more people will buy it. Once the price has passed through certain criteria and the options have been hedged, if the price falls, the hedging of these options will cause those same purchasers to sell. This might raise the price much more.

Crude oil technical analysis

On Friday, WTI crude oil reached its highest level since October 2014. 

The upward movement has bumped up against the Bollinger Band based on the 21-day simple moving average (SMA), but it has been unable to close outside of the upper band. This might imply that the market is satisfied with the rate of change in the rally. 

On the upside, resistance might be found at the most recent prior high of 88.84. 

The 10-day simple moving average (SMA) is trading slightly above a previous pivot point at 85.90, suggesting that it may provide support. 

Previous lows and pivot points of 81.90, 79.33, 77.44, 74.96, 74.76, and 73.34 may also be useful.

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