- WTI has managed to rise around $110 and looks to test last week’s highs.
- Traders cite a combination of factors including US demand, EU and Russian sanctions, and OPEC+ production issues as supporting factors.
On Thursday, oil prices broke out of a three-day consolidation pattern, and WTI futures of the first month they jumped to $114.50 a barrel from previous session lows of around $110. Thursday’s over $3.50 gain is the biggest move of the week, and WTI is now about to test the latest monthly highs of $115, in addition to late March highs of $116.50. There was no specific catalyst or fundamental event that fueled the rise. Rather, the gains were set in motion by the opening of the COMEX crude oil well from 13:00 GMT, at which point it is not uncommon to see a pick-up in volumes.
Market commentators and commodity analysts cited a combination of bullish factors as support for prices on Thursday. First, there’s a lot of talk about increased demand in the US as peak driving season approaches (most define peak US driving season as beginning next weekend). Memorial Day week and runs through September). So far, despite high prices, demand for gasoline and vehicle miles traveled have remained strong.
Second, several EU officials have objected to the recent pessimism expressed by Hungarian officials about how quickly an agreement on the EU embargo on Russian oil imports can be reached. European Council President Charles Michel said on Wednesday that he was confident an agreement could be reached between the EU and Hungary before the next EU Council summit on May 30. German Economy Minister Robert Habeck also said a deal could be reached in the coming days, or else Germany would seek “other instruments.”
In addition, OPEC + and its production problems have been in the spotlight. On Thursday, sources told Reuters that, as expected, the group will stick to its usual policy of raising production quotas by 432,000 barrels per day (BPD) each month. The cartel has been unable to meet these production increase targets for months, initially due to the struggles facing smaller OPEC producers (mainly in Africa), but now, more recently, due to falling of Russian production due to Western sanctions following its invasion of Ukraine.
According to a recent Reuters report, OPEC+ missed its production target by 2.6 million barrels per day in April, with Russia accounting for half of the miss. Production problems are expected to worsen in May. Lastly, macroeconomic flows are also helping crude prices on Thursday, with Wall Street gaining as traders cut bets on the Fed following Wednesday’s Fed Meeting Minutes and disappointing GDP numbers. American Thursday. The bulls are confident that the WTI pattern of higher highs and higher lows of the last few weeks will continue, which means a likely break higher towards $120 before likely profit taking.
Technical levels
Source: Fx Street
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