When the American popular music vocal group The 5th Dimension released the song, “Up, Up and Away” in 1967, domestic crude oil prices were at $3.12 a barrel, with an inflation adjusted price of $22.90 a barrel, and I’m quite positive they weren’t thinking about what impact $80 a barrel, or even $100 a barrel would have on the global economy. As of 12:30pm WTI crude for June delivery is up $0.18 at $71.67. With an intraday high of $72.30 for WTI and an intraday high of $80.50 for Brent crude, market participants are anxiously watching WTI’s major resistance level at $72.23 and Brent’s psychological level of $80 a barrel for a hint as to where prices may head next.
A WTI settlement above the long term trend channel-top of $72.23 should find the next major resistance level of $74.43 within the next 3-5 trading days. The nearest major support level is currently almost $2 away at $70.29. If, and that is a strong if, WTI settles under that level, we should see the upper $60’s within the next couple of weeks. However, with Iran sanctions fresh on everyone’s minds, global supply heading below the 5 year avg in the near future, and inventories in gasoline, distillates and crude down 4%, down 22%, and down 17% vs last year respectively, it appears for now the trend is our friend and that trend is up, up and away.