Oil Demand Vs Supply

Since the beginning of the pandemic till this day, Oil price projections have been one of the most anticipated instruments in the financial markets.


Crude oil futures reached prices below 0 level for the first time in history in April 2020. After that crude oil prices started retracing to the upside as demand increased due to the initiation of the vaccination phase.


Logically, as demand (Figure 1) started to increase with businesses reopening and Covid restrictions easing in most countries, Oil prices were projected to start increasing.


Figure 1: Source TradingView WTI Crude Oil prices


Major global banks projected the crude oil prices to reach $100/Barrel within the year 2021, However, these projections were analyzed taking into consideration that OPEC+ might increase supply.


Yet to this day, the OPEC+ still didn’t issue a supply increase order to tackle the increases in Oil Prices. Due to the above reasons, the current Russian/Ukrainian War, and the U.S. administration banning Russian oil imports, crude Oil prices hiked further-reaching prices exceeding $126/Barrel.


However, after that, we witnessed sharp decreases in prices, backed by the release of the SPR by the Biden Administration, which pumped more Oil into the market, and also because negotiations between Russia and Ukraine started.

This drop was technically signaled by the Head and Shoulders formation which in this case in specific was successfully triggering the Crude Oil prices downwards (Figure 2).


Figure 2: Source TradingView WTI Crude Oil prices


As also seen in the above chart (Figure 2), Crude Oil prices witnessed a major Price Support line, which was proven to be strong due to the respected upward trendline and the strong demand Zone.


On another hand, the negotiations did not prove to be positive yet, and the U.S. Administration issued further sanctions on Russia.

Currently, prices are testing 2 major Supply and Demand Zones, being at approximately $113 and $104 per barrel consecutively.


In order to possibly project the future movements of Crude Oil prices, we should focus on 4 major points, and they are the following:

  • Russian – Ukrainian Negotiations
  • OPEC+ supply orders
  • Breakout from Demand or Supply Zone (Stated Above)
  • Possibility of Europe to ban Russian oil imports


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The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice.  Any view expressed does not constitute a personal recommendation or solicitation to buy or sell.  The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI.  Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.

Given all the above-mentioned reasons, will the Oil prices reach $200/barrel by end of the year 2022 as projected by major investment banks? Or did the speculators already price in most of the news?