Oil aims for $90 with Brent eyeballing $100

• Oil (WTI) takes a step back after hitting $87.50 on Tuesday.
• The US Dollar eases a touch after a roaring performance on Tuesday.
• The American Petroleum Institute will release its weekly Crude Oil numbers on Wednesday. 

Oil price has increased 12% in just two weeks as several OPEC+ members came out with extended and enlarged production cuts. Although the outcome on the back of these headlines was very binary on Tuesday, the dust starts to settle and markets are digesting recent numbers. It might not be an easy path forward for Oil, with EU economic data points pointing to a contraction, China not recovering as quickly as expected and Saudi Arabia being a wild card as the country might still backtrack and even jack up its production.

Meanwhile, the US Dollar was the king on Tuesday as stock markets traded in the red across the globe. The US Dollar Index (DXY) was in the green against every major G20 peer. On Wednesday, the US Dollar took a step back as European Central Bank member Klaas Knot said that a surprise hike might still come in September, making markets pare back bets of no hikes to a 50-50 valuation in favour of a stronger Euro and weaker US Dollar. 

At the time of writing, Crude Oil (WTI) price trades at $85.61 per barrel and Brent Oil at $89.10.

Oil news and market movers

• OPEC+ heavyweights have pencilled in their commitments. The dust starts to settle as markets have digested the announcements, although questions remain around Saudi Arabia’s commitments. The country has been known for backtracking and even performing knee jerk reactions on previous statements. 
• Brent Oil is being labelled with a price target of $100 per barrel, with several banks and analysts revising their projections higher.
• Markets have not heard yet of US president Joe Biden as these elevated oil levels will trickle into higher gasoline prices at the pumps. A bad omen for the current ruling president  in his quest to get inflation down and control gasoline prices for households. Chances of a substantial coordinated release of oil reserves might be again the playbook. 
• As production-related headlines start to die down, the focus is likely to shift to the inventory side. 
• The American Petroleum Institute will publish at 20:30 GMT its weekly Crude Oil stock numbers. Previous reading was a drawdown of 11.486 million barrels. Any buildup in the stockpile could further weaken oil prices. 
• Equity markets are in the red on Wednesday, with biggest losses in the United Kingdom, where the FTSE 100 is down near 1%.

Oil Technical Analysis: boiling over

Oil prices are boiling over as the Relative Strength Index (RSI) heads into overbought territory. This means that less buying will start to take place as traders will see less upside potential when entering into a long Crude Oil position at these elevated levels. Look for the RSI to cool down a touch before the next upswing materialises. 

On the upside, $84.28, the high of August 10, has been broken and should hold as support. IfWTI continues to rally on the back of lower supply and more demand, not many elements could be standing in the way of reaching that green line at $92.80. Of course, the $90 psychological level needs to be faced first. 

On the downside, a temporary bottom is being formed around $77.50, which acted as a base for this week. Should the API stockpile count jump substantially higher, expect to see the floor tested as more supply is bound to come on the markets. Once bears make it through the yellow box level plotted in the chart, expect to see more downside toward $74 before finding ample support to slow down the sell-off. 

WTI US OIL daily chart