The weakening of the dollar index due to the high inflation data recorded last week has favoured the recovery of oil prices above $100 this week. Brent oil was among the top gainers yesterday, ranking first among other commodities. The cost of Brent oil jumped to a new high yesterday at $103.32 after beginning the day at $96.61 per barrel. This marks over 671 pips gains in a single day.
The WTI oil, on its part, attempted to cover on to the $100 per barrel price level but was stopped a few points away at $99.37. However, WTI made a significant jump yesterday, beginning the day at $92.81 and making an additional 656 pips in just a single day.
Oil prices have been so bullish this week. US inflation attained a high of over four decades last week at 9.1%. Many analysts, including economists from Morningstar, warn that the prices might even go higher this week.
A significant factor influencing oil prices this week is the Crude oil Inventories report to be released tomorrow. This data gives information on the changes in the number of barrels of crude oil held by commercial firms during the previous week. Often the amount of oil held by commercial firms is used in calculating the supply and demand rate for oil. A lower reading from this data suggests a higher demand for oil in the coming weeks. The forecast for this data is -1.5 Million. This is much below the previous record at 3.3 million. Should the reading for this data come out negative as predicted, we might likely see oil prices rise more due to high demand in the present week.
WTI oil prices broke above support at $98.68 during the Asian session today, with the next target at $101.10. A break above this level would give way to the next resistance at $106.66. Should the price fail to hold above the current support today, we might expect a retest of the lower level at $94.45.
Similarly, the next target for Brent oil is seen at $104.40. A break above this level will open up for the next resistance at $110.10. However, should the current support be defeated, then we will hope for a retest of the previous support at $97.80.
Understanding the difference between WTI and Brent oil
Traders often confuse these two oil forms while some see them as the same. However, they are not so, as their prices and quality vary. We have discussed these two forms of oil below:
WTI oil is a light oil with a sweet fragrance extracted in the US, particularly from Texas. Hence its name is Western Texas Intermediary (WTI). WTI ranks amongst the highest quality of oil supplied today across the globe. It is often effortless to refine, which has made it the most sought after.
Brent oil refers to the oil supply usually extracted from the North Sea. Brent is slightly heavier than WTI. This is also the reason why the price is generally higher than WTI. It has an API gravity of 38.06 and a sulphur content of 0.37%.
