USOIL is trading just over $78 per barrel, while UKOIL has spiked to $82.70, both above the highs seen yesterday after OPEC and its allies confirmed that they will be sticking with previously agreed output increases, rather than extending production further in the light of global energy constraints. However that wasn’t a surprise even though markets initially felt threatened by it! USOIL prices are at 7 year highs while UKOIL is at 3 year highs.
Given the spike in natural gas prices ahead of the European winter, oil prices will likely also remain underpinned. In the meantime, China angst and stagflation concerns continue to linger, but there are fears that price jumps in wider energy markets will push up oil prices, while capping the recovery not just in the manufacturing sector. Central bank officials are doing their best to calm nerves, but investors remain jittery. OPEC+ will meet again on November 4 and some expect the allies to meet again beforehand to discuss demand.
Oil prices have already surged more than 50% this year, a rise that has added and could continue adding to inflationary pressures that oil-consuming nations such as the US and India are concerned will derail recovery from the pandemic.
USOIL’s recent bullish pressures have been extended, breaking the upper weekly Bollinger band at 78.00, and upwards pressure is keeping the outlook bullish. The simple moving averages (SMAs) are extending northwards (20-, 50- and 200-day) endorsing medium term direction, with the overbought condition in the near term indicating a possible correction of the 2-month rally.
The daily MACD and RSI are positively configured, presenting the possible advent of further bulls, while the short term Stochastic is struggling to be sustained into bullish territory, promoting a near term pullback. If upside defences keep sellers at bay, the price may pullback to test the previous resistance (converted into support band of 68.00-70.00).
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