Crude oil price approaches $80; here's what's next

Crude oil price is trading at close to a three-year high as inches closer to the crucial level of $80. Early on Tuesday, Brent futures was at $79.36 as it eased from Monday’s high of $79.89. At the same time, the benchmark for US oil – WTI futures – was at $75.36 after easing from Monday’s high of $75.75.

Demand outlook

Since late August, crude oil price has been trading steadily above the support zone at $70. With the ongoing rally, Goldman Sachs’ latest forecast appears attainable. In the past week, the firm’s global head of commodities research, Jeff Currie, asserted that the price may reach $90 per barrel. The expected surge is founded on the likelihood of the winter season in the northern hemisphere being colder than normal.

The oil market remains subject to tight supplies as global demand recovers from the Delta variant. Besides, US production is yet to fully recover from the disruptions triggered by Hurricane Ida.

In the ensuing sessions, inventory data from API and EIA will likely fuel the ongoing narrative of tight supplies and rising demand. Late on Tuesday, investors will be keen on API’s numbers after last week’s reading of -6.108 million barrels. Furthermore, analysts expect EIA’ data to show a draw of 2.333 million barrels compared to the prior week’s decline of 3.481 million.     

Crude oil price prediction

On Monday, oil price extended its gains to trade at its highest level since October 2018. While it has eased early on Tuesday’s session, it remains close to the psychological level of 80.

Since the beginning of September, Brent futures- the benchmark for global oil – has surged by bout 11.02%. Over the past one week, the price has risen by 6.95%. Notably, it has been trading steadily above the crucial support zone of 70 since moving past that zone in late August.

At the time of writing, Brent oil was up by 1.73% at 79.36. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages.

In the near term, crude oil price will likely find resistance at the psychological level of 80. Subsequently, a pullback may place the support level along the 25-day EMA at 78.41. Additional bullish momentum may push the price to mid-October 2018’s level of 80.96. However, a move below 78 will invalidate this thesis.