Commodities

Mid-Week Technical Outlook: Oil Hits Fresh 7 Year High

Written by Lukman Otunuga

Oil bulls were injected with renewed confidence on Wednesday as Brent and Crude climbed to their highest level since October 2014.

Buying sentiment towards the global commodity was boosted by supply disruptions coming from Turkey, while the International Energy Agency’s (IEA) bullish outlook on oil markets fuelled upside gains.  As fears fade over the demand impact from Omicron and supplies are tightened by a range of outages across the globe, this could propel prices higher. We are just three weeks into the New year but both benchmarks are up almost 15%! It will be interesting to see whether the current upside momentum and fundamentals inspire a move towards $100.

Speaking of prices levels, oil remains bullish on the daily, weekly, and monthly timeframe.

Brent journeys towards $100…

Brent is trading around $87.90 as of writing. This is roughly $12 away from the big $100 level. It is worth keeping in mind that the last time Brent saw $100 was back in 2014. 

Looking at the technical picture, there have been consistently higher highs and higher lows. The technical and screaming further upside but it may be worth keeping a close eye on the fundamentals. A solid breakout above $90 could open doors towards $92.40 and $97.00 before the big $100.

Should bulls lose steam before reaching $90, a decline back below $85.80 could be a possibility.

WTI Crude not far behind

We see a similar story on WTI Crude as bulls push prices closer to the $100 level.

Prices are trading above the 50, 100, and 200-day Simple Moving Average while the MACD trades to the upside. A strong move above $90 could signal an incline towards $94 and $98 before testing $100.

Alternatively, a drop back below $84.20 may inspire bears to target $78.00.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

About the author

Lukman Otunuga

Lukman Otunuga is a Senior Research Analyst at FXTM. A keen follower of macroeconomic events with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis.

He is known for delivering in-depth market insights via his video series, FXTM Market Updates, and has written for top publications, including the Financial Times and The Guardian. Lukman’s in-depth analysis on the global markets is often cited by leading international media, including the Associated Press (AP), BBC, CNBC, CNN, Marketwatch, NASDAQ and The Telegraph. He has also appeared on Africa’s biggest television network, NTA 2.

Lukman holds a BSc (Hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance.

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