Expectations of supply decline push WTI close to $89

Oil fundamentals

Oil prices are on the rise, driven by expectations of a supply shortage and OPEC's optimism about fuel demand in major economies. In its monthly report, OPEC has maintained a positive outlook for demand growth in both the current year and the next, projecting a 2.25 million barrels per day increase in global oil demand for 2024.

The U.S. Energy Information Administration (EIA) has also weighed in, predicting a global oil production increase from 101.2 million barrels per day in 2023 to 102.9 million barrels per day in 2024. Furthermore, the EIA foresees a daily reduction in global oil inventories by approximately half a million barrels during the latter half of 2023. This expected tightening of supply is likely to drive up oil prices, with Brent crude reaching an estimated $93 per barrel in the fourth quarter of this year.

In other news, markets wait on the Consumer Price Index (CPI) in the US. At the start of the day, WTI crude oil saw a modest increase, trading around the $89.12 per barrel mark.

Key pivot and technical levels that could affect oil movements

Oil has successfully surpassed the $87.50 resistance level, which represents the upper boundary of the ascending triangle pattern. The upward momentum has extended to $89.00 levels, and there is a possibility of further ascent to $90.00 and then $92.00 levels.

On the downside, a clear break below the $88.00 support level, could lead to a retest of $87.50, which has transformed from a price resistance zone into a significant support level.

It is crucial for oil prices to remain above the $87.50 level in order to confirm the intention of further upward movement. If it is breached, a decline towards the $85.60 level is likely.