Crude Oil Price Analysis – Crude Oil Collapses as Ceasefire Announced

Crude Oil Technical Analysis

The light sweet crude oil market has plunged during trading on Wednesday morning as the ceasefire agreement between the United States and Iran has taken hold. This also has the knock-on effect of the Strait of Hormuz being reopened, and that obviously puts a significant amount of pressure on this market.

With that being the case, I do think that further selling pressure will probably continue unless we get some type of resumption of the hostilities or something to that effect. Interest rates started dropping almost immediately, it had more of a risk-on feel, but the crude oil market had a war premium built into it that is now being taken out.

I would anticipate that somewhere around the $85 level, we should see a pretty significant floor. If we can get an actual longer-term peace, we’ll probably break through there. Right now, between $85 and $100 is the most likely candidate for some type of range.

Brent Technical Analysis

Brent markets look very much the same as many other grades around the world. This morning, it touched the 50-day EMA, which, of course, is a major indicator that a lot of people will be watching. A breakdown below there opens up the $85 level. Any bounce at this point in time though I think has to deal with the $100 level as a potential barrier.

I do not like the idea of getting aggressive here. I don’t want to catch a falling knife because this is basically all headline-driven, and as long as that’s the case, there’s really not a lot you can do safely, that is. I prefer to fade short-term rallies, truth be known, and will look to shorter-term charts that show signs of exhaustion to take advantage of what I think is probably a substantial move just waiting to happen.