WTI pulls back to the $85.00 level after hitting new multi-year highs near $86.00

• After hitting multi-year highs near $86.00 a barrel, WTI has since pulled back to trade around $85.00.
• Market commentators have attributed the rising geopolitical tensions in the Middle East to the latest bullish momentum.
• Goldman Sachs calls for oil (Brent) to reach $100 per barrel in the second half of 2022.

After hitting multi-year highs early in the European trading session near the $86.00 per barrel level, WTI futures from the previous month have pulled back to trade around $85.00, although they still maintain gains of around $60 on the session. Market commentators have blamed geopolitical tensions for fueling the latest surge in crude prices, after an attack by Yemen’s Shiite Houthi militia in the United Arab Emirates earlier in the week ratcheted up tensions in the region. Following drone and missile strikes that killed three people and sparked fuel truck explosions, the Houthis have been threatening to attack more UAE facilities.

The latest spike in tensions in the Middle East comes at a time when global crude oil markets already look much tighter than analysts expected at the start of the year. A smaller-than-expected hit to global demand from Omicron combined with the difficulties some smaller OPEC+ members have had in ramping up production led Goldman Sachs to announce that oil (Brent) will hit $100 a barrel in the second half. of 2022. The bank explained that the above factors had “kept the global oil market in a deficit greater than even our previous consensus forecast,” a factor that has likely been driving rising premiums in various physical grades of crude oil over prices. futures in recent weeks.

“If current geopolitical tensions continue and OPEC+ members are unable to deliver on their 400,000 barrels per day increase, the macros coupled with the strong technical outlook could push prices closer to $100,” the analysts concluded. from CMC Markets. In fact, oil technicals have looked relentlessly bullish in recent weeks. Since the December 20 low of $66.11, WTI is up nearly $20.00 or close to 30%, after consistently posting higher highs followed by higher lows. Although WTI posted multi-year highs on Tuesday, it has yet to be able to convincingly break above 2021 highs. If this were to be the case and WTI were to rally above $86.00, the next target resistance level would be the lows of January 2014 in the area of ​​$91.50.

Technical levels