Crude oil price has begun the new week in the green; setting the pace for another week of gains. Notably, the commodity has been on a wining streak for five weeks in a row. The last time that it recorded such a streak was in early September when the rallying extended uninterrupted until mid October.
Demand optimism has been the key driver of the bull market. In recent sessions, geopolitical tensions in the Middle East and Eastern Europe have also boosted the prices.
As at 09:04 a.m GMT, Brent futures were at $88.20; up by 0.57%. At the same time, the benchmark for US oil – WTI futures – were up by 0.72% at $85.37.
From the supply side, members of the OPEC+ have continued to struggle to reach the set output target. As such, geopolitical tensions between Russia and Ukraine and in the Middle East have investors worried that the already tight supplies may get even tighter following output disruptions.
Amid heightened concerns over a probable Russian attack in Ukraine, President Joe Biden is considering deploying troops to NATO allies. Besides, the State Department has ordered diplomats’ families in Ukraine to leave the country. US citizens and non-emergency staff has also been advised to exit the area.
In the Middle East, UAE’s Ministry of Defence has indicated the interception and destruction of two ballistic missiles fired by the Houthi terrorist militia targeting the country’s capital, Abu Dhabi. A week ago, the Yemen terrorists claimed responsibility for an attack on a crude oil facility in the region.
On the demand side, the expected decline in coronavirus infections will help get people back to offices and travel more; an aspect that will boost crude oil consumption. While President Biden’s chief medical adviser – Dr. Anthony Fauci – is optimistic that infection levels will soon peak, he warns against being overconfident.
Crude oil price prediction
After hitting an over three-month low in early December at 65.80, crude oil price has rallied by close to 35%. The daily chart highlights an ongoing uptrend as the prices remain above the 25 and 50-day exponential moving averages.
With an RSI of 70.35, the commodity is at the border of the overbought zone. While the bullish outlook still holds, I expect it to continue finding some resistance along last week’s high of 89.55. With enough momentum to break the resistance, the bulls will have an opportunity to hit and surpass the next target at 90.00.
On the lower side, crude oil price will likely continue to hold steady above the psychologically crucial level of 80.00. Indeed, a move below this zone will invalidate this thesis. At its current level, a further pullback may place the support level along the 25-day EMA at 82.98.