WTI crude is up another 0.7% to $63.70 today
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The gains in oil this month have been rather unrelenting, with the rally even looking past news that OPEC+ may be looking to decide on increasing production starting from April at its next meeting in March.
That said, such a development may not be too surprising given how elevated prices are at this point in time, all things considered.
The technical picture is what intrigues me more for oil as we look set for a breach above its 100-month moving average (red line) for the first time since 2014.
Price also looks to be targeting a break above key trendline resistance and that may set the stage for a potential push towards the 200-month moving average (blue line) next. That level is seen @ $69.63 currently.
Despite a more bullish outlook over the next few years, the 22% climb in oil prices this month (following a 7.5% jump in January) alone presents a plausible argument that we are closer to the peak this year than we are to the bottom perhaps.
If OPEC+ does plan on ramping up production further in the quarters ahead, that might still temper with oil sentiment alongside the lull months from July to September typically – despite consideration that supplies may be tighter throughout the year.
That said, the vaccine rollout and global economic reopening remains one of the key timelines to watch. If that progresses much faster than anticipated, demand will be bolstered and that will also keep oil prices more buoyed later in 2H 2021.
Those will be the key fundamental factors for oil in the bigger picture this year.
Going back to the technicals, things are looking more bullish as well but there are some key levels to be mindful about before we get to the 200-month moving average too.
The April 2019 and January 2020 highs at $66.60 and $65.65 respectively also provides some resistance should the upside move extend further in the weeks ahead.