- Western Texas Intermediate printed a two-month high at 73.90
- Oil companies with installations in the Gulf of Mexico turn to Iraq and Canadian oil.
- The crude oil rally was capped by China’s first sale of crude of its reserves.
Western Texas Intermediate (WTI) crude oil is climbing for the fourth day in a row, surging almost 1%, trading at $73.86 at the time of writing.
The market sentiment is downbeat. Major global equity indices closed with losses, except for the Japanese Nikkei and Topix, which reported gains of 2.06% and 2.31%. Meanwhile, as the New York session advances, the S&P 500, the Dow Jones, and the Nasdaq record losses between 0.01% and 0.25%.
WTI reached two-month highs at $73.90
The surge in oil prices is due to low inventories in the US, which are near a three-year low, and rising natural gas prices impacting customers who may be forced to switch to oil. Further, no new lockdowns in Europe and robust recovery in China mobility lift the prospects for upside.
In the Gulf of Mexico, crude oil companies that have not been able to re-establish operations turn to Iraq and Canadian oil to meet the market demands.
Nevertheless, the rally was capped by China’s first sale of crude from its strategic petroleum reserves in its attempt to curb inflation in raw material prices.
WTI Price Forecast: Technical outlook
WTI is trading above the neckline of an inverted head-and-shoulders pattern that has bullish implications. A daily close above the July 30 high at $73.88 could propel the black gold towards the inverted head-and-shoulders target of $80.00. But on its way up, it will find the July 13 high at $74.95, followed by $76.00. A decisive break of that level would expose the inverted head-and-shoulders target of $80.00
The Relative Strength Index is at 65, aiming higher, towards oversold levels, but it has room for some upside.