WTI Crude Oil Price Analysis for May 12, 2022

WTI crude oil continues to trend higher on its 4-hour time frame, with price bouncing off the ascending channel support. The Fibonacci extension tool shows the next potential upside targets.

The commodity price is already testing the 38.2% extension that lines up with the mid-channel area of interest around $104.50 per barrel. Stronger bullish pressure could take crude oil up to the 50% extension around $106.45 per barrel or the 61.8% level at $108.31 per barrel. The 76.4% level lines up with the channel top near $112 per barrel while the full extension is at $114.38 per barrel.

The 100 SMA is still narrowly above the 200 SMA to indicate that the path of least resistance is to the upside or that the uptrend could carry on. Price is also above both moving averages, so these could hold as dynamic support.

Stochastic has some room to climb before reflecting overbought conditions, so bullish pressure could persist for a while. RSI has more ground to cover on its move to the overbought area, but it seems that the oscillator is turning back down.

Crude oil shrugged off a surprise build of 8.5 million barrels in inventories versus analysts’ expectations of a draw of 1.0 million barrels. This is also much larger than the earlier increase of 1.3 million barrels in stockpiles, reflecting slower demand or a pickup in production.

The commodity is drawing support from the US NOPEC legislation that seeks to target oil producers like the OPEC. Also, the Department of Energy trimmed its US crude production outlook by 100,000 b/d for 2022, which could keep concerns of a supply crunch in play.

Meanwhile, the EU moves closer to a full embargo on Russian fuel commodities, which might also keep global supply limited. Although the US is releasing part of its SPR, the country is also buying back some of these reserves to support domestic demand.

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