Oil consolidates above $100 as supply pressures remain
Ion Jauregui – Analyst at ActivTrades
Oil maintains a bullish structure at the European mid-session, although with some profit-taking after the strong advance of recent sessions. At 15:20 CET, LCrude is trading around $99.60 per barrel, consolidating around a zone that is once again gaining technical relevance after recovering the highs recorded in March, April and May.
The move remains supported by supply concerns. Attacks on Saudi energy infrastructure forced the interruption of the East-West Pipeline, a route capable of transporting around 4 million barrels per day to the port of Yanbu, while flows through the Strait of Hormuz remain constrained. The disruption also came after Saudi Arabia reduced some shipments to Europe.
The market has, however, started to partially price in an improvement in availability. Saudi Arabia is offering additional cargoes through Oman, while U.S. inventories increased by 7.1 million barrels last week according to API data. This explains part of today's correction, although it does not eliminate the supply risk while disruptions in the Middle East persist.
From a technical perspective, the current level is particularly relevant because the point of control is around $100, practically in the area where the contract is trading now. The recovery of the March, April and May highs has changed the structure of the daily chart and makes this area a reference for determining whether the move can extend towards new highs.
The indicators maintain a constructive reading, although the RSI stands at 67.60, close to the overbought zone, increasing the risk of short-term corrections. The MACD continues to show the average and signal line separating to the upside, with a positive and rising histogram, indicating that buying momentum continues to expand.
The behaviour of the moving averages also stands out. The 50-day moving average is approaching a recovery of its position relative to price versus the 100-day moving average, a configuration that would reinforce the bullish structure if it is ultimately confirmed. As long as the price manages to remain around $100 and the indicators maintain their momentum, the technical scenario continues to point towards a possible continuation towards previous highs.
The key for crude oil now will be its ability to turn $100 into support. Consolidation above this level would keep open the possibility of a further move higher, while a clear loss of the point of control would increase the risk of a correction before another recovery attempt.
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TITradingView Ideas16 Sept
