On Course For Historic Intra-day Rally, WTI Approaches USD 107.50 Highs

The American WTI crude oil surged into the USD 104.00s on Tuesday, up sharply from Monday’s close in the USD 95.00 territories.

The 2014 high in the USD 107.50 area has for now acted as a barrier to further upside. The historic intra-day rally has been driven by traders pricing in a greater risk of Russia’s oil supply disruption.

Oil prices have been surging on Tuesday as traders more and more realize that financial sanctions on Russia are likely to have ramifications on the country’s ability to export energy products, even if Western sanctions don’t directly target Russian energy.

As a result, front-month WTI futures are currently on course for a historic one-day rally of just under USD 9.0 (or over 9%), with prices currently trading in the mid-USD 104.00s, up from Monday’s closing levels in the USD 95.00s.

That takes WTI’s on-the-week rally to just shy of USD 13.00. In recent trade, prices have pulled back quite aggressively from earlier peaks.

WTI nearly challenged 2014 highs in the USD 107.50 area and at one point did eclipse USD 107, though profit-taking ahead of this key area of resistance took some wind out of the day’s rally.

Once this level is manifested, that will open the door to a test of the 2013 highs around USD 112.

Traders seemed disappointed that major oil-consuming nations agreed to only release 60M barrels of oil reserves at Tuesday’s extraordinary International Energy Agency meeting, news which failed to offset bullishness after sources said OPEC+ would stick to its current output policy.

OPEC+ is expected to agree to another 400K barrel per day hike to output quotas in April when they meet later in the week.