Crude oil price has been in the green for five consecutive weeks amid heightened demand optimism. The last time that the commodity recorded such a streak of gains was between early September and mid October.
Early on Monday, Brent futures – the benchmark for global oil – remained close to the 2014 high of 89.55 that was recorded in the past week. As at 03:57 a.m GMT, it was at 88.38. At the same time, WTI futures were up by 1% at $85.61.
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According to Dr. Anthony Fauci, President’s Biden’s key medical adviser,COVID-19 will likely drop to manageable levels in coming months. However, during his interview on ABC’s This Week, he was keen on being overconfident about the current situation. A decline of infections to controllable levels will mean that people will travel more and return to their offices; an aspect that would increase oil consumption.
At the same time, concerns over tight supplies have continued to fuel an uptrend in crude oil price. The ongoing tensions in Eastern Europe has resulted in the US State Department ordering diplomats’ families to leave its embassy in Kyiv, Ukraine. US citizens and non-emergency employees have also been urged to exit the country amid heightened fears of Russia attacking the country.
Crude oil price prediction
Since early December when crude oil price dropped to 65.80, its lowest level since late August, Brent futures have surged by 34.68%. On a daily chart, it is still above the 25 and 50-day exponential moving averages. Besides, it is on the border of the overbought territory with an RSI of 70.95.
In the short term, I expect crude oil price to continue experiencing resistance at the recent high of 89.55. However, as the bullish outlook still holds, I expect it to continue trading above the psychologically crucial level of 80.
A further decline from its current level may place the support level along the 25-day EMA at 82.98. Subsequently, additional bullish momentum may give the bulls an opportunity to push the price to the upper target of 90. This thesis will be invalidated by a move below 80.
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