Crude Oil Price Analysis – Crude Oil Continues to React to War

It is a geopolitical shock that has caused crude oil to surge as of late. It is worth noting that the war has now reached its 14th day in the Middle East and that is still your primary catalyst for what happens.

We are hovering near 2-year highs in the light sweet crude oil market, and right now, as the Strait of Hormuz is responsible for 20% of global seaborne trade, it does make sense that there is still pressure to the upside.

WTI Crude Oil Technical Analysis

The light sweet crude oil market seems to be reacting to the $100 level and there is the fact that the IEA is authorizing a 400-million-barrel strategic reserve release and the US Treasury has recently issued a 30-day license for what they consider to be stranded Russian oil to enter the market.

This does provide a little bit of downward pressure on the market, but just a bit. In this environment, it is going to take a lot to calm traders down, and because of this, the market probably has about a $20 fear premium based on the new Ayatollah suggesting that things are going to get worse before they get better.

Brent Crude Oil Technical Analysis

The Brent market is very much the same. It is hanging around the psychologically important $100 level. I think the market is likely to continue to see a little bit of resistance here, but it is more psychological than anything else.

If we do get a pullback from here again, I would be willing to buy this market and I think your floor at the moment is $85. I understand that is pretty far from where we are at the moment, but we have had a couple of days here where we have seen massive swings in $10 moves that happen almost immediately only to see them reversed. If you do choose to trade crude oil it is paramount that you keep your position size small.

Short-term pullbacks are very possible but if we were to break down from here, I would look at that as a buying opportunity until hostilities cease.