Oil price is trading steadily above the crucial support level of $70 after the bears’ unsuccessful attempt to push it below that zone earlier in the week. Tight supply and a positive demand outlook are fueling the rally.
According to Goldman Sachs, oil price is likely to reach $90 per barrel. During an interview on Bloomberg, the company’s global head of commodities research, Jeff Currie, indicated that a colder than expected winter in the northern hemisphere will heighten demand for crude oil. Notably, the predicted rise is $10 higher than the bank’s latest forecast.
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During the interview on Wednesday, Currie cited the surge in natural gas prices as one of the drivers of the expected rallying. The high gas prices, coupled with tight supplies in the European continent, will likely increase the demand for crude oil as the key alternative. On a broader scope, disruption of production in the United States’ Gulf of Mexico after Hurricane Ida will also play into the demand and supply dynamics.
Goldman Sachs’ forecast comes at a time when the US is recording tighter supplies. According to the inventory data released by the Energy Information Administration (EIA) on Wednesday, oil stockpiles fell lower-than-expected for the week ending on 17th September. The recorded draw of 3.481 million barrels was higher than the forecaste decline of 2.440 million. Notably, the US oil inventory has been declining for 17 out of the past 18 weeks. These figures have boosted the demand outlook.
Oil price prediction
Crude oil is rallying for the third consecutive session after dropping below the crucial support level of 70 earlier in the week. After dropping below 72 at the beginning of the week, it is back up above that zone. At the time of writing, WTI futures were up by 0.46% at 72.25.
On a two-hour chart, oil price is trading above the 25 and 50-day exponential moving averages. In the short term, it will probably remain above the psychological level of 70. Subsequently, 72 will be a crucial support level for the commodity. A pullback may place it along the 25-day EMA at 71.70 before continuing with its rallying. On the upside, the bull’s next target will be September’s high of 73.12 and the higher level of 74.
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