WTI Tests $91 as Supply Risks Support Crude Oil Rally

WTI Crude Oil Technical Analysis

The light sweet crude oil market is more or less treading water just below the $91 level early on Friday, as we have perhaps run into a little bit of gravity. Furthermore, we get the jobs report here shortly, and that might have a little bit of an influence here. But when you look at this chart, you can see that we’ve had a very strong week. In fact, this is the best week we’ve had since mid-July.

And at this point in time, there are a couple of different things moving. The US inventory numbers showed that the US crude stocks fell by 4.5 million barrels last week, which is much more than the anticipated 1.1 million barrels. Furthermore, the US-Iran escalation only drives oil much higher. The physical market remains pretty tight as well, as this is an actual disruption to supply. So really, at this point in time, it looks as if we’re just simply correcting a rally that had been in effect.

Brent Technical Analysis

The Brent market looks very much the same, giving back a little bit of gains after a couple of exhaustion candlesticks earlier this week. And with that being the case, this pullback’s probably healthy. Again, we had a very strong rally this week. Gravity eventually shows up.

But there are the usual suspects moving this market as well. The Strait of Hormuz shipping remains constrained, and Ukrainian attacks on Russian refinery infrastructure is adding another layer to some of the tightness here as well. The analysts out there are starting to raise their forecast on crude oil at some of the major banks, so that also comes into play.

Now the Iraqis have begun to export about 2.3 million barrels per day in August from 1.35 million barrels in July, so that comes into effect here as well, maybe keeping a little bit of a lid here. As we head into the weekend, there are still a lot of questions.

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