WTI oil quotes were at the highest levels since the middle of November last year after 2 days of steady growth. The resistance range of 82.5-83, which has been restraining oil prices in recent months, is now under active attack of bulls. If the upward break of the resistance is confirmed, the next upside target for WTI oil will shift to $85 per barrel.
Oil production cuts by OPEC+ countries are pushing prices up. In March, the decrease in oil production was the largest in the last 10 months, amounting 680,000 barrels per day, reaching 37.64 million barrels. Most of the OPEC+ cuts came from Russia and Nigeria. As a result, OPEC+ oil production volume dropped to May 2022 levels. Current production of the exporting countries alliance is below the target quota by 2.5 million barrels per day.
OPEC will publish its monthly oil market review today. It will allow to get a relevant view of the forecast for the market balance in 2023 after additional production cuts starting in May. According to Fatih Birol, head of the International Energy Agency, global demand for fuel is likely to exceed supply in the second half of the year.
The data on growth of reserves in the U.S. could not stop the growth of oil prices. At the same time, the increase in crude oil reserves was insignificant by just 0.6 million barrels. Moreover, the increase in commercial inventories is entirely caused by sales of 1.6 million barrels from the Strategic Petroleum Reserve (SPR), otherwise a local deficit would occur again. As the summer auto season is coming, tensions with supplies can only get worse, which will support oil prices.
In case of consolidation above the 82.5-83 range, the WTI oil quotes may immediately go to the level of 85. The Stochastic indicator gives a buy signal, increasing the probability of continued growth in oil prices.
The following trading strategy option can be suggested:
Buy WTI oil near the 83 level. Take profit – 85. Stop loss – 81.5.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
