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Oil is up over 1% on the day again as price looks to try and inch towards testing the $115 mark once more this week.
The break higher on Monday sees a technical push above trendline resistance from the late March to early May highs but we are now running into some resistance around the $115 region as seen in the chart above.
I don’t want to be a broken record to keep repeating the resilience in oil but it has certainly been quite remarkable despite ongoing worries about global growth – not to mention the dollar’s strength against the commodities space in general.
I’ll leave what I said last week as yet another reminder on oil’s bullishness:
“I think one key argument that not many people are raising is that there continues to be a shortage in supply and the situation is likely to get worse amid the supposed transition to green energy. The fact there is underinvestment in the sector and falling inventories continue to allude to a tighter market in general.
“Throw in the fact that Russia supplies are being phased out with little to no immediate substitutes, the tighter market outlook is going to stay for longer. The capacity shortage and the fact that OPEC+ is also not doing much more than they are now isn’t going to help alleviate sentiment on that front either.
“When you throw in those factors and see how resilient oil prices have been as of late. It’s rather scary to imagine where prices might end up once we get over this hump.”
The technicals are also abiding now with the potential breakout from the wedge above, though it needs to clear the region of $115.37 to $116.61 to really establish the next leg higher.