Oil climbs on supply worries, limited Omicron impact

Brent crude futures

Brent Oil was trading 0.44% up at  $86.45.

 Oil prices rose on Monday, with Brent futures touching their highest in more than three years, as investors bet supply will remain tight amid restrained output by major producers with global demand unperturbed by the Omicron coronavirus variant.

Brent crude futures gained 40 cents, or 0.5%, to $86.46 a barrel by 0641 GMT. Earlier in the session, the contract touched its highest since Oct. 3, 2018, at $86.71.

U.S. West Texas Intermediate crude was up 58 cents, or 0.7%, at $84.40 a barrel, after hitting $84.78, the highest since Nov. 10, 2021, earlier in the session.

The gains followed a rally last week when Brent rose more than 5% and WTI climbed over 6%.

Frantic oil buying, driven by supply outages and signs the Omicron variant will not be as disruptive as feared for fuel demand, has pushed some crude grades to multi-year highs, suggesting the rally in Brent futures could be sustained a while longer, traders said.

“The bullish sentiment is continuing as (producer group) OPEC+ is not providing enough supply to meet strong global demand,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

“If (investment) funds increase allocation weight for crude, prices could reach their highs of 2014,” he said.

The Organization of the Petroleum Exporting Countries, Russia, and their allies, together known as OPEC+, are gradually relaxing output cuts implemented when demand collapsed in 2020.

But many smaller producers cannot raise supply and others have been wary of pumping too much oil in case of renewed COVID-19 setbacks.

RSI Stood at 70.803, the current price is trading Above All the Moving Averages. So, a  Buy trade can be executed with the following target and stop-loss:

TRADE SIGNAL-Brent OilBuy: 86.40, TARGET:-92.40, STOP LOSS:- 83.40.

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