Crude Oil Price Analysis – Crude Oil Breaking Higher on Tensions

Crude Oil Technical Analysis

The light sweet crude oil market is threatening the $66.50 level, an area that’s been important a couple of times in the past as we continue to see strength. The question is, will we see follow-through?

There are a lot of concerns right now about the Americans striking the Iranians perhaps over the weekend, and that of course has oil markets in a little bit of a panic. The Russians are doing a joint exercise with the Iranians near the Strait of Hormuz, but at the end of the day, there is a very high probability of not only the Americans hitting the Iranians, but the Americans not hitting the oil refineries and oil infrastructure.

If we get a sudden spike over the early hours on Monday in Asian trading, then I think we look at this as a fade the rally type of situation. I do believe that crude oil goes higher over time as it’s heading into summer. We may go looking for $70 here, but I think impulsive moves are to be looked at with suspicion.

Brent Technical Analysis

Brent markets, as you would expect based upon where the Brent markets tend to be affected by, have actually broken out. So, with that, we’re looking at $72, maybe $73.

Again, this is a situation if we get a wicked spike like we got during the last military action, it’s probably an opportunity to get short. If we don’t, then we probably grind a little higher because we are heading into that driving season. The driving season, of course, pushes crude oil higher and demand higher as well. If we do get pullbacks, I think there’s plenty of support near the 200-day EMA.

If you’d like to know more about what drives oil prices, please visit our educational area.