Crude oil price forecast with a crucial level in focus

Crude oil price has extended the week’s gains amid growing demand confidence. Earlier on Tuesday, Brent futures were at the highest level in a month as it edged closer to the psychological level of $80 per barrel.  Similarly, WTI futures hit a one-month high at $77.00 before pulling back to the current $76.31.

Demand/supply outlook

Earlier on Monday, crude oil price declined as a reaction to the heightened flight cancellations over the Christmas weekend. However, the commodity’s movements on Tuesday are a sign that investors are looking past the Omicron variant.

President Joe Biden has pledged to deal with the current shortage of coronavirus tests. The current situation has threatened to overwhelm health facilities and hamper travel plans. Besides, UK’s Prime Minister – Boris Johnson – has indicated that he will not introduce additional COVID-19 restrictions in England before 2022. The UK government will be focusing on individual responsibility while assessing whether the country’s health system can handle the rising cases.

Investors are also keen on the OPEC+ meeting scheduled for next week. In its past meeting, the alliance decided to continue with its plan to hike output by 400,000 bpd in January despite concerns over the impact of the variant on global oil demand. In the coming meeting, the focus will be on whether the program will continue into February.    

Crude oil price prediction

Brent futures have edged closer to the psychologically crucial level of 80. It has risen from an intraday low of 75.86 on Monday to the current 79.40. Earlier in the day, it hit a high of 79.86. Since dropping to a low of 69.33 a week ago, the benchmark for global oil has risen by about 14.71%.

On a four-hour chart, crude oil price is trading above the 25 and 50-day exponential moving averages. Besides, it has entered the overbought territory with an RSI of 76.

In the near term, it will likely pull back from its current level before bouncing back to and above 80. From this perspective, it may find support along Tuesday’s low of 78.47 or lower along the 25-day EMA at 76.76.

On the upside, it will likely find resistance at 80.18. Additional bullish momentum may push crude oil price to the resistance level at 81.49.