Oil holds near Nov. 2014 highs, eyes bull flag breakout

• WTI crude oil is trading at $71/barrel, i.e. just short of recent 3.5-year high of $71.88
• Eyes a bull flag breakout, could clock fresh 3.5-year highs above $71.88.

Currently, US oil is flat-lined around $71/barrel, having recovered from the low of $70.20 yesterday on the back of the bullish OPEC report.

The cartel revised higher its forecast for global oil demand growth this year by 25,000 barrels per day - a bullish development for oil markets. However, the cartel also revised higher the non-OPEC supply forecast by 10,000 barrels per day, which does not come as a surprise given the rising US oil output. Hence, oil remains bid and on the hunt for fresh 3.5-year highs.

Further, the possibility of reduced exports from Iran after renewed US sanctions is also keeping oil close to Nov. 2014 highs and the technical chart also shows a bull flag setup - a bullish continuation pattern.

WTI Oil Technical Outlook

A bull flag breakout would open the doors to $71.88 (recent highs). A violation there would expose resistance lined up at $74.93 (October 2011 low). On the downside, support is seen at $70.11 (Ascending 10-day MA), $69.56 (April 2018 high).

Chart source: Netstation, Netdania