Oil price prediction: charts get a boost from the demand and supply side

  • UKOil
  • USOil

Above show FXCM's WTI CFD (left) and Brent CFD(Right). Both charts suggest bullish continuation patterns (turquoise parallel lines). If completed with respective breakouts, the measured move (not shown) for USOil is just below $120, and for UKOil is near the $124 level. However, to reach these targets, their stochastics will need to remain at current levels above 80 (green rectangle). This position would suggest an underlying momentum for the energy instruments. However, if the stochastics turn and move down, the current momentum is waning.

Oil is benefitting from:
1. On the demand side, Beijing and Shanghai are relaxing Covid lockdown restrictions as the number of cases drops; and
2. On the supply side, the EU failed on Sunday to agree on an embargo on Russian oil. Diplomats will continue their efforts today and tomorrow. Hungary holds up a consensus, maintaining that the check will affect its economy as it cannot quickly source oil elsewhere. Slovakia and the Czech Republic have expressed similarly. A possible solution was that the ban would apply to tankers but allow delivery via the Druzhba pipeline, but EU financing concerns still need agreement.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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