Risk-on sentiment paid a visit to the global markets as the banking crisis worries subsided. The WTI Crude Oil Futures (NYMEX: CL) benefited from the shift in sentiment in the prior week, gaining a handsome 3.65%.

The week opened with risk-on sentiment still in the room. In addition, supply-side constraints built on the favourable upside conditions following the halt in exports of 450,000 barrels per day (bpd) or 1% of global crude oil supply in Iraqi’s Kurdistan region. The supply cut comes from a dispute between Turkey and Iraq over an arbitration case. Oil companies in the region expect the constraints to persist until a settlement between the respective parties is reached.

The EIA inventory count for the week piles on to the positive outlook as inventory came in -7.4060M lower than expected, signalling strong demand for crude oil.

Technical

The WTI Crude Oil Futures’ bullish momentum shined, following a breakout above the 100-day moving average and a key resistance level, which now acts as support at the $73.05 per barrel level (BLL). The next level of significance is resistance at the $76.90 BLL level.

Bullish traders will likely look to go higher after the breakout above the $73.05 BLL on high volumes. A high volume breakout above the consolidation pattern resistance ($73.22 BLL) forming at the support level could indicate bulls are outdoing bears. Bulls will probably earmark the $76.90 BLL level as their next preferred level to take profit.

Alternatively, bears could be looking to sell high. A breakout below the $73.05 BLL level on high volumes could signify bearish market players entering the market in numbers. The next probable level of interest would be the $69.78 BLL level.

Summary

With the supply constraints and risk-on sentiment playing out, the WTI Crude Oil Futures will probably move higher, with the $76.90 level likely. However, the upside could be mitigated with Crude oil traders now setting sights on the stand-off between the Federal Reserve (Fed) and Inflation. The highly anticipated PCE Index is due on the last day of the week. The PCE Index is the Fed’s preferred gauge of inflation. Higher inflation will likely nudge future interest rates outlook higher as the Fed looks to fight off inflation, offsetting upside momentum for CL.

Sources: EIA, Reuters, TradingView