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  • A combination of supporting factors pushed WTI crude oil to the highest level since October 2018.
  • Prospects for strong demand recovery, the risk-on mood remained supportive of the momentum.
  • Expectations for an increase in global crude supply might hold bulls from placing aggressive bets.

WTI crude oil shot to the highest level since October 2018, around the $68.70 area in the last hour, albeit retreated a bit thereafter. The commodity was last seen trading around mid-$68.00s, up over 3.50% for the day.

The black gold added to its strong intraday gains and continued scaling higher through the early North American session on Tuesday. The momentum was supported by an upbeat outlook for the world economic recovery and expectation for growing fuel demand during the summer driving season in the United States.

In fact, OPEC’s technical committee on Monday confirmed forecasts for a rebound of six million barrels a day in world oil demand in 2021. Spot prices were also boosted by the prevalent risk-on environment and bearish sentiment surrounding the US dollar, which tends to benefit dollar-denominated commodities, including oil.

The strong momentum could further be attributed to some technical buying on a sustained move beyond a heavy supply zone near the $68.00 round figure. That said, expectations that more output will hit the market might hold bulls from placing aggressive bets and keep a lid on any further gains, at least for the time being.

Reuters – citing two sources familiar with the matter – reported this Tuesday OPEC+ Joint Ministerial Monitoring Committee (JMMC) has recommended producers to stick to the agreed oil output policy through July. It is worth recalling that OPEC+ decided in April to return 2.1 million barrels per day of supply from May to July.

Looking at the technical picture, acceptance above the $68.00 mark might have already set the stage for additional gains. The bullish outlook is reinforced by the fact that oscillators on the daily chart are still far from being in the overbought territory. Hence, some follow-through strength, towards reclaiming the $69.00 level, remains a distinct possibility.

Technical levels to watch