WTI oil prices extend their rally for a third consecutive day, driven by supportive fundamentals

The recovery from the $71.46 low (August 21) has extended into a third consecutive day, accelerating on Monday following reports of a near-complete halt in oil production in Libya due to escalating political tensions.

This development adds to mounting concerns over geopolitical instability in the Middle East, which has supported rising oil prices over the past few days.

The near-term outlook is brightening as fundamentals align with an improving technical picture on the daily chart.

A double-bottom pattern has formed, followed by a strong upward move that broke above the 10-day and 20-day moving averages. Additionally, the 14-day momentum is steeply rising in positive territory, while the RSI has moved above neutral levels, all contributing to stronger bullish signals.

The recovery has retraced over 61.8% of the $80.14 to $71.46 downleg, putting pressure on key resistance levels at $77.79 (200-day moving average) and $78.09 (76.4% Fibonacci retracement), which are just ahead of another significant resistance at $78.48 (base of the daily cloud).

The cloud is thinning and is expected to twist next week, which could attract more bullish interest. However, stronger resistance near this zone may slow further gains.

Oil prices are likely to rise further if fundamentals remain supportive, with a break above the crucial $80.00 resistance area needed to confirm a broader bullish reversal and pave the way for additional upside.

Positive signals are reinforced by last week’s Hammer candlestick on the weekly chart and 14-week momentum nearing a breakout above the centerline.

Res: 77.79; 78.09; 78.48; 78.71
Sup: 76.82; 76.52; 75.80; 75.55