Crude oil price has rebounded after a five-session decline. While the $80 support level has proven steady, investors are keen on the viability of the forecasted level of $100.
Viability of $100 forecast
Between late-August and mid-October, crude oil price rallied for nine consecutive weeks. With the steady uptrend, the forecasted $100 per barrel appeared to be a matter of ‘when’ rather than ‘if’. The outlook was founded on the rise in global oil demand.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
However, price movements over the past three weeks have dampened the upward momentum. Granted, the bears’ attempts to break the support at $80 has been unsuccessful. Investors and analysts are now questioning the viability of the forecasted $100 per barrel.
Mohamed El-Erain, CEO of Gramercy Fund Management and chief economic advisor at Allianz, is among those questioning the predicted figure. During a CNBC interview on Monday, El-Erain noted that $100 is a viable level if one focuses solely on the supply side. However, he noted that the market has not considered if demand will be as robust six months from now.
In the past week, OPEC lowered its forecast for global oil demand in the year’s last quarter. Besides, the alliance decided to maintain its output cuts in December despite calls from the US and other customers to increase production.
WTI technical outlook
Crude oil price has eased after rebounding from Monday’s low. Over the past five sessions, the commodity has been on a downward movement amid the tainted demand outlook. During this timeframe, it has dropped by 6.66% from a high of 84.97.
On Monday, it extended its previous losses; pushing the bulls to defend the crucial support level of 80. The benchmark for US oil -WTI futures – has since rebounded from Monday’s low of 79.28 to the current 81.20.
On a two-hour chart, it is trading slightly above the 25 and 50-day EMA. Amid the ongoing volatility, crude oil price may continue trading within the range of between 82.30 and 79.28.
From this perspective, 80 will remain a crucial support level for the commodity in the coming weeks. Past the horizontal channel’s upper border, the bulls will be eyeing 84.00. However, there will need to be enough momentum to push the price past the resistance at 83.25.
67% of retail CFD accounts lose money