WTI Crude Oil Price Analysis for May 13, 2022

WTI crude oil is gaining traction on its climb, as price broke through the mid-channel area of interest and is making its way up to the resistance around $112 per barrel.

The 100 SMA is still above the 200 SMA to confirm that the path of least resistance is to the upside or that support is more likely to hold than to break. Price is also trading above both indicators, so these moving averages could hold as dynamic support levels on dips.

Stochastic is already indicating overbought conditions or exhaustion among buyers, so turning lower would mean that sellers are about to take over. In that case, crude oil could dip back to nearby support levels like the channel bottom around $100 per barrel.

RSI has a bit more room to climb, so price could keep following suit until overbought conditions are met.

Earlier in the week, the API and EIA reported surprise increases in stockpiles, suggesting a pickup in output or a drop in demand. However, crude oil shrugged off these bearish factors and continued to tread higher likely because of the looming EU embargo on Russian oil.

This would mean that the region has to sources it crude oil and fuel commodities elsewhere, which might prompt a global supply crunch as demand continues to pick up.

Forecasts of US oil production were downgraded, further adding to potential energy crunch concerns. The Energy Information Administration trimmed its US crude production outlook by 100K bpd for 2022.

However, fears of a recession in China are dampening bullish bets since tighter zero-COVID policies might once again derail business activity and supply chain movements. In turn, this could translate to lower purchases of fuel and energy commodities, as well as weaker appetite for risk.

 

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