• Crude oil futures give away gains after hitting fresh highs at $85.35.
• The oil rally remains intact, boosted by concerns of an oil crunch.
• WTI: Testing support at $83.90 previous resistance.

Front-month WTI is losing steam on Monday’s US trading session after having climbed to a fresh seven-year high above $85.00 earlier today. Crude prices have retreated more than $1,00 so far, hitting session lows at $84.00 area and turning negative on daily charts. 

Fears of an energy crunch are boosting oil prices

The West Texas Intermediate (WTI) futures remain moving within a solid upside trend, buoyed by concerns that the tight supply and increasing demand for crude, as the global economy recovers from the COVID-19 crisis, might lead to an energy crunch this winter.

A report from the US bank Goldman Sachs forecasting that we could be “at the beginning of a material repricing for higher oil” has contributed to boosting WTI prices to fresh highs. Goldman Sachs affirms that the UK benchmark Brent oil could hit $90 per barrel by the end of the year (about 4.5% above current prices), as demand is rebounding further and oil producers are dragging their feet to increase supply.

WTI prices about to test support at $83.90

On the downside, WTI futures might find support at the previous resistance level 83.90 (October 18 and 20 highs) below here, next potential targets might be at $82.50 and $81.50 (October 22 low).

Alternatively, if the mentioned 83.90 level holds, upside momentum would remain intact, to set another attempt to break intra-day high at 85.35, on its way towards the 90.00 psychological area.

Technical level to watch