FX.co ★ CL/Crude Oil

WTI OIL Daily Outlook Update WTI futures are trading at +0.4% at about $81.40 during the early hours of the European trading session on Friday. The price of oil rises after the two-day fall owing to worries over the blocking of significant transport channels in the Middle East region. "The fundamental balance in crude oil and its products is likely to lead to higher prices in the medium term," according to TD Securities’ analysts. The current sell-off was merely temporary within an overall optimistic outlook on oil prices, they said. The number of ships transporting oil commodities via the Hormuz has risen slightly on Thursday but is less than the average of 12 compared to the average per day in August so far, based on a report from Reuters citing data from Kpler. It is a very steep fall in the number of ships compared to 130 or 140 ships per day earlier due to war. Vessels transiting the Hormuz and the Bab al-Mandab straits have been rare since both straits were effectively closed off due to blocks imposed by the US in one strait and by Iran-linked Houthis in another. There is no movement of ships in the Strait of Hormuz and the Bab al-Mandeb Strait, which together are responsible for 27% of the world’s energy resources, because there have been blockades on both straits by the US in the former case and the Houthis in the latter, who are affiliated with Iran. On the other hand, Iran is yet to enter into any agreement on the reopening of the Hormuz Strait with the US but has almost agreed on joint management of traffic in the strait with Oman. In terms of demand, the Organization of Petroleum Exporting Countries (OPEC) has downgraded the demand forecast for global oil by 200,000 bpd to 580,000 bpd from the earlier figure of 780,000 bpd.

The price level of WTI US oil on the daily timeframe is at $80.76. The asset is bearish as it is continuing to trade above the level of the 20-period EMA, which is placed at $80.04. The given value represents the support zone of the asset after its recent resurgence rally from the consolidation area of the mid-$70s. At the same time, the value of the Relative Strength Index (14) at about 51 is at neutral levels, signaling the presence of some positive momentum. The current support level for WTI US Oil is the 20-period EMA at $80.04, following the resurgence of the bulls at this level, while a breakdown of this level will trigger some negative sentiment, resulting in a drop in price towards consolidation in the mid-$70s. The resistance for the asset cannot be spotted among the given indicators, as it implies that further gains in WTI US Oil can happen if the price trades above $80.04.