On Tuesday, Brent crude rose to $88.2 per barrel, the highest price in seven years, as limited supply cannot keep up with rising demand and some analysts predict that it will rise above $100 per barrel this year. WTI price rose late on Tuesday to over $86 per barrel, going above its October highs, breaking through the $85.7 per barrel resistance level and recording the highest price since 2014.
OPEC released its monthly report on Tuesday, which held a positive view, stating that the demand for oil was not expected to be affected significantly by the Omicron coronavirus variant and expected interest rate hikes.
WTI price has been on an uptrend for about a month, as demand rises in the winter months, but supply is still tight. Even though OPEC has recently agreed to increase output by 400,000 barrels per day, supply is still not enough and some OPEC & partners have failed to reach their monthly target output. US producers have also been trying to increase their output, but after having to severely limit output during the height of the pandemic they are facing infrastructure and capacity constraints, so it is not easy to ramp up production again so quickly. Geopolitical problems, such as the Russia-Ukraine crisis and rising tensions in the middle east, also contribute towards driving the price of the commodity up.
The outlook for the commodity is bullish and it may continue to trade along its uptrend on Wednesday. In case the trend is reversed, support may be found at the $77.8 per barrel level.
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