Oil prices have seen a strong rebound on Thursday, with front-month WTI futures surging nearly $8.0 (or over 8.0%) from under $95.00 per barrel to current levels in the $102.00s. That means WTI has now been able to erase more than 50% of this week’s losses that at one point saw it trading more than $15.0 lower in the $93.00s and is now down under $7.0 on the week. That still leaves prices about $27 below last week’s highs, but Thursday’s rally may signal an end to the near-non-stop selling pressure of the past six sessions. 

In doing so, the black gold keeps Wednesday’s bounce off 50-DMA while justifying firmer RSI. Adding to the upside bias is the rebound in the MACD line.

That said, WTI crude oil buyers are all set to challenge the 10-DMA level at around $105.30. However, 23.6% Fibonacci retracement (Fibo.) of December 2021 to March 2022 upside, near $112.50, will challenge the commodity’s further upside.

Following that, a run-up towards the latest peak of 126.15 and then to the year 2008 high near $135.00 can’t be ruled out.

Alternatively, the $100.00 threshold restricts the short-term downside of the energy benchmark ahead of the 50-DMA level of $92.85.

Should the WTI sellers conquer the $92.85 level, the 61.8% Fibo. and a 3.5-month-long support line, respectively around $86.80 and $85.00, will be in focus.

As for what lies ahead for oil markets, geopolitics remains the main big risk. If a peace deal does suddenly look highly likely and is on the cusp of being announced, this is a big downside risk for prices, which could be easily sent tumbling back below earlier weekly lows in the $93.00s. Meanwhile, Covid-19 risk in China remains worth monitoring to see whether authorities there can get things back under control.

WTI Dependent Upon Fundamentals for Future Projections

Mar 18 2022