WTI crude oil price prediction: bulls remain in control while above $90

Inflation is on everyone’s mind lately. The prices of goods and services spiraled higher lately, fueled mainly by the monetary and fiscal policies in reaction to the COVID-19 pandemic and now by the Russia-Ukraine war.

To give just an example of how the conflict between Russia and Ukraine is impacting inflation, think no further than the cost of insurance for the oil shipping industry. For instance, hiring a Suezmax (a ship able to carry 1 million barrels of oil) from the Black Sea to Italy costs about $3.5 million, but the insurance cost adds another $5 million.

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This is just one example that shows how the conflict impacts the oil price and, indirectly, inflation. Therefore, the pressure on inflation would decrease should we see a decline in the price of oil.

While the fundamentals keep pointing to elevated oil prices, what does the technical analysis picture say?

WTI crude oil price remains bullish while above $90

Oil broke above $100 this year and rallied all the way to $125 before correcting a bit. It looks like a contracting triangle forms at the current levels, with the pressure on the lower trendline mounting.

Therefore, a break below the lower trendline would suggest that the triangle has acted as a reversal pattern. The WTI crude oil price enters a neutral territory on such a move, meaning that the bias will remain bullish, but caution is needed.

$80/barrel switches the bias from bullish to bearish

A decline below the rising trendline implies that the price of oil drops below $80. Such a move is bearish and suggests that further downside is possible.

The rise in energy prices has been responsible for most of the rise in inflation, and so the inflation pressure should ease if the WTI crude oil price drops below $80. At the same time with the increase in the price of oil, the US dollar got stronger, thus amplifying the impact on the prices of goods and services.

All in all, the WTI crude oil’s rally from negative territory to above $100 in just two years is the main reason why inflation rose globally. Therefore, a correction would offer a bit of a release to economies, populations, and central banks across the globe too.