Oil looks set to reach $90 despite US production at near full capacity

• WTI Oil closed off Thursday at $82.82, close to a fresh five-month high.
• Oil traders remain bullish despite recent US stockpile build-ups.
• The US Dollar Index trades in the green,  and could post a fresh monthly high. 

Oil prices have been heading higher in recent weeks, with several elements painting a rather sketchy picture of the US status in the global Oil market. Any bearish moves in recent weeks were often attributed to the fact that the US was flooding the markets with Oil in order to temper prices. However, Bloomberg reports that the US Energy Department is very active in buying Oil at current prices to rebuild a 40-year low in US strategic reserves, which means that the US is dumping Oil to get prices lower while it is buying that same Oil back at a higher price. 

The US Dollar, meanwhile, is roaring again with the US Dollar bulls performing a four-day winning streak ahead of the US Personal Consumption Expenditures (PCE) Price Index numbers. Markets are on edge as recent inflation measures have pointed to an uptick in price pressures. If the PCE  points to accelerating inflation, this could result in markets starting to cut back the number of interest-rate cuts expected for this year, pushing back further down the initial rate cut from the US Federal Reserve. 

Crude Oil (WTI) closed off at $82.82 per barrel, and Brent Oil closed off at $86.82 per barrel on Thursday evening. 

Oil could set sail to $90 as US attempts fail to outweigh OPEC production cuts

• Next Wednesday, OPEC will meet to discuss and decide on the current production cuts. Expectations are that Saudi Arabia will prolong its part until the end of this year. 
• Despite Easter Monday, the US Energy Information Administration will release the US stockpile changes for this week on Wednesday as normal.The American Petroleum Institute will release overnight figures on Tuesday as usual.
• Quite a number of Oil tankers are reporting to be stuck in Venezuela off the coast. Traders that jumped on the easing of sanctions against the country are now facing issues with the tankers unable to load. 

Oil Technical Analysis: US strategic reserve build-up economics

Oil prices are set to head higher as the game of chicken between the US and OPEC appears to be falling in favor of the Oil cartel. The US is unable to oversupply markets with oil as it is unable to match the production cuts from Saudi Arabia and Russia. Being forced to restock its strategic reserves, the US is paying a very expensive price in its economic war with Russia and OPEC, while it creates a second-round effect in US inflation with prices at the gas pumps remaining fragile for upswings. 

Oil bulls will see $86 appearing as the next cap. Further up, $86.90 follows suit before targeting $89.64 and $93.98 as top levels. 

On the downside, both $80.00 and $80.60 should be acting as support with the 200-day Simple Moving Average (SMA) as the level to catch any falling knives near $78.55. The 100-day and the 55-day SMA’s are near $75.64 and $77.15, respectively. Add the pivotal level near $75.27, and it looks like the downside is very limited and well-equipped to resist the selling pressure. 

US WTI Crude Oil: Daily Chart