Oil surging higher - where to next?
Crude tagged $115 intraday and it now seems like $120 is in the crosshairs. There is substantial call buying volume taking place at the $120 strike level. This will lead to market makers being short gamma and crude being prone to price squeezes higher. Although sanctions have not been specifically placed on Russian crude, there is a complete dearth of any buyers, with steep discounts on Urals not being enough to entice interest. The OPEC+ meeting today is likely to rubber stamp a 400k bpd increase in supply. So no surprises on that front. The oil price is a key input into the inflation debate. With stagflation fears rising fast and furiously, this is a key asset to keep an eye on.
The chartshows price moving in almost a straight line vertically. There is serious divergence from the moving averages, even the shorter term 21-day EMA, which has been a useful tool as a form of dynamic support. $120 is definitely a target on the upside, while weakness could find price falling back towards $100. The RSI is substantially overbought with a reading of just shy of 84.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.