Oil Begins 2022 in Green

Crude futures have had a solid start to the year, with crude futures trading in the green for the first whole week of 2022 trading.

Following the weakening of the US dollar rally, crude prices are now up around 30% from their lows in Q4 2021. Early in Q4, the greenback’s strength dealt a blow to crude’s upside. Crude has recovered, even though USD bulls have lost steam since early December. This week, the big news for oil traders was OPEC+’s announcement that, following a meeting, the group would begin to increase production further this year. OPEC+ and a group of non-OPEC allied nations led by Russia announced plans to increase oil output by 400k barrels per day beginning in February. It represents a 100 percent increase over the 400k barrel per day increase announced in August of last year.

The move is consistent with OPEC’s pledge to gradually reduce the roughly 10 million barrels per day of supply. Following the latest increase, the group still has approximately 3 million barrels per day of collection to restore.

Technical View

Price has broken back above the rising trend line and several vital structural levels following the rally from the Q4 2021 lows. Price recently broke back above the 74.46 level, and with both MACD and RSI bullish, the focus is on the further upside as long as the price remains above this level.

Bulls will need to see a break of the current 78.49 level resistance to open a path to 83.75 next.