West Texas Intermediate (WTI) currently trades at 70.18 at this writing and is set to close lower this week after reaching a new 2018 high of 72.87, just a few dollars shy of the 76.47 target cited in our January 2018 forecast. Oil moved lower this week mostly due to strong gains in the US dollar and a surprise surplus in last weeks crude oil inventories. The US dollar was broadly bid this week and achieved new 2018 highs against a basket of global currencies fueled by European and far east markets net long equities covering positions and moving funds back to US dollars. The US dollar is the largest and most liquid market and remains the worlds reserve currency as the majority of global funds denominate in USD as their base currency. The USD also had additional buying interest this week out of Turkey and Venezuela as both countries central banks raise interest rates in their efforts to slow capital flows out of their country. The US dollar has gained 5 out of the last 6 weeks while oil has moved higher 8 of the last 9 months as historically when USD gains, oil falls. In recent months, however, oil has remained bid despite USD gains as global demand has and will keep oil bid well into 2030.
Earlier today Russian Energy Minister Novak stated that the global oil glut is over with expectations for long-term rise in demand and prices while also today Saudi Oil Minister Falih said that Saudi will boost supply to meet expected rising demand. Russia, USA, and Saudi Arabia are the 3 largest producers of oil with all three each producing 10.5-11.5 million barrels per day. WTI dropped from today’s earlier high of 70.72 on news that Saudi will increase production to meet current demand. From a technical basis, WTI has achieved the 71.93 target cited in my Mar 3, 2018 forecast with near-term support at 67.26 and 61.09 as buy orders build at these levels just as the northern hemisphere moves into seasonal high oil demand. Look for WTI to continue to find dips as buying opportunities with 76.47 as the upside target. Look for daily prices to open above 72.87 and close higher followed by a weekly open and higher close to confirm further price rise is once again underway to our next target 76.47.