WTI oil opened with wide gap higher on Monday and soared to $130 per barrel, the highest since July 2008.
Threats of further escalation of war in Ukraine continued to inflate energy prices in past few days, while the latest threat comes from growing fears about stronger oil shortage in the market as talks with Iran were delayed due to Western sanctions on Russian products, signaling that Iran oil may not be distributed soon.
Although the Russian energy products were not included in the first package of the sanctions, this options remains on the table and world fears that cuts of most of Russia’s energy exports would be a major shock to global markets.
Such scenario would signal that global markets enter stagflation and major central banks coming under increased pressure to review their plans for the near future and probably keep financial stimulus for some time.
Oil price surged nearly 20% in the wild action last week, marking the record weekly advance, with today’s gap-higher opening and fresh extension higher, suggesting that it may rise much higher.
Close above $130 would reinforce strong bullish stance for possible re-test of record 2008 peak at $147.2 per barrel, as bulls approach target at $131.93 (Fibo 176.4% projection of the rally from $6.52 pandemic low) the last significant obstacle.
Firmly bullish technical studies add to overall outlook, although the energy market is currently driven purely by geopolitics, with shallow dips expected to provide better buying opportunities.
Res: 126.66; 130.48; 131.93; 135.00.
Sup: 122.08; 120.00; 116.00; 112.80.
